When is a Good Time to Pass The Baton… to Your Brother? Burnout Time!

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Kirk McMillan is now CEO/Owner @ VIS3

 

Second-generation Kirk McMillan successfully grew his family’s U.S. company, Twelve Baskets, from $4 million to $50 million annual revenue. Then his brother was invited by his father to join in and decision-making became “complicated.” Learn from someone who has come out through the tunnel of frustration, lack of support, and ultimately burnout and who learned how to survive and thrive.

-You assumed the leadership of your family business right after finishing university. What were the circumstances around it?

I was a senior in college and I was about to start interviewing. I was home for the holidays. After dinner, I was at the dinner table and my parents asked me, “Would you be interested in coming to work for the family? We need help.” And I thought about it, I was like, ok. I’d been working in the business, I had done all the little things you do growing up in a family business. Then I came in and there wasn’t a formal process to say: Here’s how the business runs…I just had to jump in and figure it out as I went along.

– When did you become CEO of the company?

Within four years. I started out without a title. Then I was there for four years and my dad and mom made me the president of the organization but I was already acting in that role without having the title. Because I was already doing the strategies, already putting things in place that needed to be done to change the company.

-How did it feel not to have a job description when you joined in?

I didn’t have an official one so… the people looked at me from a leadership perspective. But my dad looked at me as a son, he didn’t look at me as someone like a partner. I don’t really even know if he looked at me as an employee either, he just looked at me as a son. And so when we would have meetings with employees, suppliers, and customers that dynamic was not working because he was treating me like a son in all of these meetings. So I told him, “Dad you can’t continue to treat me as a son, if this is going to work, you have to start looking at me as part of the organization, as an owner, as a leader of it.” But that didn’t change; he kept doing it so I had to find a way to change it up. So I stopped calling him Dad. In those meetings I started calling him by his first name. And that was a shock for him. But eventually he did change—it took him a little while but he did. The funny part was that it immediately made a difference with the employees, the customers, and the suppliers. They looked at me differently. I call it system shock—I had to shock the system to make it change.

– What were the main challenges in taking over the presidency so young?

I was 26 at the time. The challenges were more strategic challenges because where I was taking the business was strategically different than where my dad was comfortable. So the challenge was trying to marry the risk that is involved with the strategies and getting the family on board with that. So that was difficult whereas my dad and mom didn’t take much risk before. But we had to take more risks to survive, to grow the business. We couldn’t do all the things that I wanted to do because there had to be some synergy between the family and the business.

-And then you grew your family business from $4 million a year to $50 million. What in your opinion has been the key to your success?

Well first, the system shock.  Continuing to challenge the business and the employees to do something differently than what they are used to. That was the biggest key, keeping people on edge to grow the business.

Having the buy-in from people collectively as a group was another big key, getting everybody together to move forward. And finally, looking further out time wise. We would look five years out or ten years out and not try to get caught up in what’s happening today to where you’re just reacting to the world that’s happening around you. That was a big culture shift for our business because my dad is a very reactive person. He’s happy when he goes home and he’s put out ten fires during the day.

Another challenge was keeping people motivated and energized, getting them where they are happy coming in to work wanting to do the things that were important.

-How did you feel when your father offered your younger brother a position with the company without asking for your input first?

At first I was angry, it was sort of taken as disrespectful, a lack of recognition for not only the position and work I was doing, but lack of recognition and respect for our relationship. That was my initial reaction to that. But then I asked myself, “Is this a family business?” and I really had to sit back and say, “All right, this is a family business and this may be best for us.” It doesn’t matter so much how I feel about it, I can make the most of this situation and make it as positive as possible.

-In 2007 your company got a very good offer from a competitor to get bought out and your family didn’t accept the offer. That was the first time that you didn’t feel you were in a family business—why?

It’s a big step for the family to say yes, we want to entertain an offer from another company, so you are basically saying that we are willing to give up what we built. And then as we got further into the negotiations, my brother, I, my parents, everybody had individual motivations to sell and they weren’t collective. It wasn’t where everyone was getting together and saying all right, what’s best for the family. That’s when I realized, Is this really a family business? And if it doesn’t feel like a family business maybe I really need to look at doing something else. And I was already feeling this way personally from other aspects because I was losing energy. I was burned out. I had been president of the organization for thirteen years but really running the business for fifteen years. I couldn’t convince my family to get a board of directors so I didn’t have a support network. I didn’t have any support systems where I could get honest feedback.

When I was running the business early on and up until when my brother got there, ultimately I was making decisions as president of the organization and I didn’t really seek my dad’s buy-in on those decisions. I just did what I thought was best and if my dad didn’t like them we would just end up fighting about it some but for the most part he ended up coming along on those decisions. When my brother came in things shifted and it became more of a democracy where decisions weren’t getting made. So I was really getting burned out. My dad and brother would be in alignment and I would be the outsider trying to do things. The business wasn’t moving forward, I wasn’t able to convince them to do things that I thought needed to be done. So now this offer comes in, we agreed to talk to this company and then all the personal motivations started to come out—what people are looking for. I said this just doesn’t seem like a family business. The motivations don’t really seem like we’re looking out for the family long term.

– After 15 years leading the company you decide to pass the baton to your younger brother. How did it feel?

It was a five-year process. It was two years of this very emotional cycle. The self-evaluation of what did I like about the business? What did I dislike? What did I get out of it personally? What were the challenges? What were my successes? What were my failures? Why would I want to stay? Why would I want to go? In that two-year process I just kept evaluating and at the end I realized that it was best for me to leave. For personal growth, for personal reasons that I needed to do something else. So at the end of the two years is when I told my parents; I didn’t talk to them before that period of time. Once I made the decision there was peace. I was happy with it. From that point on whatever I needed to do to help the transition I was willing to do. So my brother and I took on a co-president role for a year but ultimately he was making a lot of the decisions. I took on the CFO role during his first year as president and a year later, I stepped away from the business, realizing that my brother needed me to be away for him to be able to grow. He needed that autonomy to not have anybody to blame and only he himself to enjoy the successes. My brother had been in my shadow for all of his life.  I realized that I needed to step away completely so I did and now he’s got the chance to experience that on his own, which I think has been really good for him.

-If you had the chance to do it all over again what would you do differently?

I would have insisted on a board of directors. Looking back I would have found other ways to at least have found an advisory board because I think ultimately that’s where I lost my motivation. I think that would have made a world of difference, probably to the point where I might have had the motivation to stay around. And I would have had the different perspectives and views to where maybe the company could have gone in a different direction and maybe become even better. Also, I would have forced my family to do more communication collectively as a family. Unfortunately the conversations that I typically had with my dad or my mom ended up being business-related. So we didn’t have that connection on a personal perspective. I would have tried to find some creative ways to where the family could have done some things as family. Probably use some outside facilitators to do that. Other than that I don’t look back and have regrets. I had failures over time but I wouldn’t trade those because I learned a lot from those failures.

-Do you have a word of advice for Next Generation members who find themselves going through a similar situation?

You’ve got to find ways to stay energized. And for everybody that’s different. For me what I realized is that I needed a support system that was going to challenge me intellectually, professionally and personally. I didn’t have that so I would say for anybody that’s thinking of running their family’s business or that’s in their family’s business and they’re just feeling overwhelmed in the process is to find that support network. Whether it’s a group of peers, friends, or an advisory board, I think you need an outlet to let things go. You need an outlet to bounce ideas off. An outlet where you can get some validation and support that gives you that strength, that energy to make the hard decisions. For me the hardest part was for a lot of time I made a lot of decisions where I felt like I was on an island by myself. So you really don’t have a basis to say am I doing a good job, am I doing a bad job? People are social; we need people to share things with. To continue to be energized and challenged—that’s the best advice I can give.

 

What about you? Have you gone through a similar experience? What have you done to overcome it?

 

 

Written by Carmen Lence, Family Business Coach and Consultant at http://www.nextgenfamilybusiness.com/

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What did I learn about Next Generation at last week’s FFI conference?

From left ro right: Iñigo Susaeta, Borja Raventós, Neus Feliu, Alberto Gimeno and Carmen Lence

The Family Firm Institute is the world’s leading organization for family firm consultants and this year they celebrated their 25th anniversary by offering a conference that was focused on next generation issues. I really enjoyed the conference and felt that I was among friends. The FFI is a collective of people that work to help family businesses succeed over generations, and they are really passionate about it. I suspect that the main reason for such enthusiasm is related to the fact that many of them come from a family business themselves.

I started my journey through the conference by choosing a presentation that reflected on what have we learned about Family Business over the last 25 years. It was called “Persistent 5@25: Key Topics over 25 Tears Through Practitioner and Scholarly Eyes” and was delivered by Jane Hilburt-Davis and Pramodita Sharma. To me, the most interesting part of the presentation concerned the research that indicated that, 20 years from now, there is going to be more female family business leaders than male. That would mean a big jump: at the moment only 24% of Family Business have a female CEO. It was also comforting to learn that there is no concrete evidence in existence that proves that men are better business leaders than women.

The second presentation: “Surviving and Thriving in Narcissistic Family Businesses”, by Michael Madera and Steve Rosenbaum, included a short film that demonstrated the effects that a narcissistic personality can have over future generations. It was actually painful to watch how, despite all the suffering that the controlling personality of the founder had inflicted over his sons, his controlling behavior was something that the children sadly inherited. The 3rd generation approach to deal with their narcissistic parents was to limit their interactions with them in order to protect themselves from their damaging personalities. The advice from the presenters for people dealing with narcissistic personalities in the family business was to “Take responsibility and care of yourself; Establish clear boundaries; Understand the past, or be doomed to repeat it“ and finally, if the misery generated is intolerable, the best thing you can do is to get out of there!

During lunch, Steve Grossman, former President of Grossman Marketing Group, shared with us the secrets for keeping his family business in the family for four generations, and the secret to having a great successful life: “to have a happy life, you have to have a family, a career and give back to the community.” Great advice!

The next presenter I chose to see was Edouard Thijssen, a 5th generation member of the Belgian group Aliaxis. There are about 100 people in Edouard’s family but none of them work on a day to day basis in the family business.  Edouard felt the need to create something that would keep his big family close and in contact and, as no family member worked in the business, he was conscious of the need to keep the “family feeling” element of the family business. So he joined forces with Edouard Janssen, 6th Generation of Solvay, also from Belgium, and together they created TrustedFamily, an online secure platform where families can share information about their family members and their business issues. The company is now working with more than 50 families all over the world. The smallest families they serve have 10 members and their platform is customizable to their particular client’s needs.  Edouard is an inspiration for those Next Generation family business members that take the initiative and decide to create their own business. Well done!

“What’s so Different About Leadership in The Family Enterprise?” by Ivan Lansberg and Wendy R. Ulaszek, was my next choice. Mr. Lansberg explained how the old advice of “ treating your family as a family, and your business as a business…” had proven to be negative for FamilyBiz, as it denied them the use of their competitive advantage of having a family behind the business. In his experience, the most effective leaders for family businesses are the ones that “are able to build ambidextrous capacity, to balance polarizing needs of the family and the business.” One of the examples he cited concerned promoting “nepotism with excellence” which means to, “Invest in the development and mentoring of the next generation of leaders.” I couldn’t agree more.

The panel “Next Gen’s Status in Family Business: It’s Complicated” shared the experiences of John Morris, second generation member of Franklin Morris Associates, Alana Feld, second generation of Feld Entertainment, and Brett Levy, second generation of Riverside Properties, in working for their Family Business. Brett explained how the sudden health problems of his father threw him quite suddenly and unexpectedly into dealing with bigger responsibilities and how that experience made him, and the company, stronger. Alana described how she believes that working in the family business is a “lifestyle” and advised parents to offer their children the right position (avoiding putting then straight into big positions they may not be ready for) to prevent setting them up for failure.  John explained that when he decided to join the Family Business, his father gave him a letter that said “Dear father, I’m leaving the company, no questions asked, no answers needed”, he hopes that he’ll never have to sign it and give it back to his father. It was inspiring to see the passion each of these people had for their business and their willingness to work hard really shone through. With people like this, family business really does have a great future ahead!

The closing keynote by Andrew Lippman from MIT, was not only inspiring but entertaining. Mr. Lippman proved to be quite a showman and threw a few jokes into his presentation that helped all of us to keep focus after such a long day. I enjoyed his explanation about “the rate of change in society is a function of the age at which youth are introduced to the dominant technology of the time”, it made me think about my 3-year-old daughter playing with the iPad… and yes, it seems correct that nowadays the rate of change is at 3 years max…

I learned many things during the FFI conference, but my main take-out is that there is a next generation revolution taking place. Next generation members are, more than ever before, taking the initiative to prepare themselves to become the future leaders not only of their Family Business but of their own companies. Next Generation is not only the future, it is the present!


Do you Really Have a Family Business? Spot the Differences!

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Do you really have a family Business?

Noting the differences between “a family business” and “a company run by an entrepreneur with some family members working in it” is a bit like the “Spot the differences game.” At first glance both pictures appear to be identical- a business owned by a family and run by a family member- but a closer inspection reveals that both pictures are actually quite different. Do you want to play?

Imagine that right in front of you there are two similar pictures of a CEO of a mid- sized family business in his sixties and his successor, who looks to be in his mid-thirties. Let’s spot the differences!

Difference 1-

Management approach

CEO A smiles at the camera with the confidence of someone who not only has had an extraordinary life, full of outstanding achievements, but also has been able to put into place the means for those achievements to outlive him. Throughout the years he has assembled a team of strong managers that do not hesitate to challenge his views. He has hired experienced professionals and has coached them to work as a team. They are highly motivated not only by the company’s compensation and promotion policies, but by appreciation and recognition of their achievements. CEO “A” is a firm believer in positive motivation and acknowledges management’s and employees’ contribution to the company’s success.

CEO B smiles at the camera with the confidence of someone who has had an extraordinary life, full of outstanding achievements. Throughout the years he has assembled a team of helpers that obey his orders without hesitation. He has hired inexperienced professionals (he feels that seasoned professionals have their own “ideas”) and has coached them to follow his commands. CEO B is a firm believer in “negative motivation” and reprimands his employees for mistakes while rarely acknowledging their contributions to the company’s success.

Difference 2-

Grooming the Next Generation

Successor A stands up, resting his right hand on his father’s shoulder. Their body language indicates that both men feel comfortable with each other. He shows the self-confidence of someone who is proud of himself and his family’s achievements. He has been involved in the family business since childhood, working on weekends and holidays during his school and university years. After graduating from university, he joined a multinational company and worked for them for several years before entering the family business. He has successfully managed the main business unit in the family company for the last three years.

Successor B stands up, his arms folded in front of him. His body language indicates that he feels uneasy. He shows the uncertainty and self-doubt of someone who does not feel in control of his own life. He also has always been involved in the family company and tried to get outside working experience. His father strongly opposed the idea and convinced him to stay, offering him the job of managing the main business unit. Successor “B” was aware of his father’s inability to delegate authority but decided to take the job and set his mind to getting real responsibility and decision-making power. After years of trying to change his father’s management approach to no avail, he has become another yes man in the organization. His initial frustration has turned into conformism and low self-esteem. He doesn’t challenge his father anymore , is not confident in his ability to find a position at the same level in another company and is afraid that once his father is gone he won’t be prepare  to run the Family Business as he has being train to just follow orders.

Difference 3-

Corporate Governance – The board of Directors

On the desk of CEO A sits an open calendar on which the next board of directors’ meeting is marked in red. The board of directors, including several independent entrepreneurs and professional managers, has been the key to developing a succession plan as well as to assuring the CEO’s accountability.

CEO B, on the other hand, believes that nobody has the right to tell him how to run his business, so he does not have a board of directors. He doesn’t consider planning for succession an urgent matter because he doesn’t plan to retire in the near future.

Difference 4

The family Constitution

On the top shelf of CEO A’s bookcase sits a copy of the “Family Constitution.” This contains the basic rules of how the family relates with the business. For example, it includes a rule that in order to work for the family company, a family member has to have a university degree and five years of experience working elsewhere. The family constitution, developed by the family with the assistance of an external consultant, has helped to avoid conflicts, as everybody knows what the rules are.

CEO B, on the contrary, does not believe that he needs a family constitution. He sets the rules and changes them as he pleases. He is not concerned about what may happen once he is not around anymore, because he likes to believe that he is going to be around forever.

And the final Difference:

Which company do you believe has a better chance of long-term survival?

A family business is not the same as a business run by an entrepreneur with some family members working for it. The case of The Erb Group–a private, multibillion, Swiss

conglomerate run almost exclusively by its octogenarian founder and which collapsed after his death, revealing a lack of accounting controls–should serve as a warning sign for every

entrepreneur. A responsible family business leader should consider if he really has a family business and whether he has developed the means for his business to be successful and

remain in the family in the long run.

So, do you really have a family business? Eliminate the differences!

Written by Carmen Lence of NextGen Consulting & Coaching www.nextgenfamilybusiness.com

 

Should the Next Generation Be the One to Name the Elephant in the Room?

I'm going home to the place where I belong tututu ruuuruuuruuu tu tu tu tu...I'm going home!

Last Friday, I attended a workshop by Dennis Jaffe called “Facing and Resolving Issues That Prevent Your Family Business from Moving Forward.” It was held by The Institute for Family Business, part of the University of the Pacific, and all the attendees were family business members.

I’ve read several of Dennis Jaffe’s books, and I love his practical, easy-to-understand, you-can-do-it style. Of course, he ran his workshop the same way, and we all had to face our particular “elephant in the room”(which is an obvious problem that no one wants to discuss) and how we go about having such difficult conversations.

Incidentally, I shared my table with a couple of Next Generation members and our respective elephants seemed to be of the same breed. Their elephants’ most distinctive characteristics were that they had hearing problems, lived long lives, and went by the name of “Succession.”

Jaffe made a very good point at the beginning of his presentation: If you have a problem with someone, you cannot simply expect the other person to take the initiative to solve it. The other person may not see any problem . . . well, apart from some weird behavior that most of us tent to display when we feel frustrated.

So, who is responsible for becoming a change leader and making things happen? Probably you, the one being squeezed into the wall by the elephant!

I have already pushed away my elephant a few times using all the right steps. I described what the situation was in a respectful, calm manner; explained how it made me feel; and stated what I would like to see happen in the future. But, after Jaffe’s presentation, I realized that there are a few things that I could do better next time:

1-     Let the other person know in advance that I need to discuss “X” issue with him and set up an agenda for the meeting. This way, the important conversations won’t get lost between phone calls and things will not get tense because the other person was not prepared for it or cannot focus because there is something else on his or her mind.

2-     Instead of giving up when denial and resistance keeps coming up, I’ll use coaching skills to break through. I’ll rephrase what the other person said to make sure that is what he meant. Bottom-line: keep him on track; acknowledge his positive traits, points, and actions; manage myself; and block assumptions from popping into my mind.

3-     Finally, I have to set up realistic expectations. Change is a process that takes time to effect. One conversation may not do much, but it is a start. Next time I won’t feel disappointed if there is no immediately obvious change. Instead, I’ll pat myself on the back for trying and taking one more step to make things happen.

These elephants are imposing and a bit scary, but if you keep ignoring them, they will keep taking more and more of your space until you are so pressed against the wall that it will be impossible to move any more.

So, let’s take action and send those elephants back where they belong: the jungle!

Written by Carmen Lence of NextGen Consulting & Coaching www.nextgenfamilybusiness.com