Succeeding in succession

Family businesses face hurdles moving from one generation to the next
By Katy Devlin
July 1, 2007
COMMERCIAL, RETAIL : MANAGEMENT

Most family glass businesses executives interviewed for a three-part series in e-glass weekly said succession planning is one of the most important elements to a successful and lasting family business. 

However, 53 percent of respondents to an e-glass poll said they do not have a succession plan in their family business. Thirteen percent said they have a plan, but there is still disagreement among family employees. 

“Succession is a serious issue, especially as the generations come down the pike. Sometimes succession planning is the reason family companies break up or lose members,” says Max Perilstein, vice president of marketing for Arch Aluminum & Glass Co. in Tamarac, Fla. 
The management team of Arch Aluminum & Glass Co. in Tamarac, Fla., meets at a local deli where most company decisions get made. Family glass businesses enjoy many perks, including the more casual work environment and decision-making process, but face big challenges when it comes to succession planning.
Family businesses operate on a personal level, making succession much more difficult than in traditional businesses, Perilstein says. “In a non-family company, all decisions are usually made with a business mind. While, in some family businesses, the decisions on who takes the reigns could come down to who mom likes best,” Perilstein says.

For a family business to be successful from one generation to the next, it needs a capable family member interested in continuing the company, says John Heinaman, president of Heinaman Contract Glazing in Lake Forest, Calif. Without an able successor, many family businesses will shut down.

As an alternative, family business executives can also turn to a capable non-family employee to take over, Heinaman says. “For some people who don’t have anybody to take over, they can sometimes sell the business to a key employee who is capable,” he says. 

Children of family business leaders also should not feel pressure to take over a company, or even work at the business, adds Thad W. Ziegler, president of Thad Ziegler Glass in San Antonio, a fifth generation family company. Rather, future generations are more likely to take an active position at a business if they come to the decision on their own, he says.

“My father made it clear that it’s not expected of me to go into the business, and I did the same with my sons and daughter,” Ziegler says. “It’s important for kids to know that it’s not expected, but that they’re more than welcome if they want to join.” 

Sometimes more challenging than finding a successor is getting an executive to let the next generation take over. “This can be a real problem—sometimes the old dad won’t let go,” Heinaman says. “Sometimes the dads wear out their welcome and are antiquated in their thinking.”

Kris Vockler, vice president of ICD High Performance Coatings in Vancouver, Wash., says family members who start a company become entrenched in the businesses and sometimes aren’t as open to change. “Growth is hard when you have an older mentality,” she says.

Vockler says ICD High Performance Coatings has found continued success through changes at the company because of open communication from all generations of employees. 

Ziegler agrees and emphasizes company leaders must listen and respect the ideas from the upcoming generation of family members. 

“Make sure you do in fact consider that idea,” Ziegler says. “… They need to realize that their point was considered.” 

Whether developing growth strategies or creating a succession plan, family businesses should be open to getting guidance from outside consultants, Heinaman says. 

“For any company that has difficulties or wants to make a transition, hire a business coach or business consultant,” Heinaman says. “That’s my best suggestion to solve the problem with any transition.”  

To read the three-part series on family businesses from the April 10, April 17 and April 24 editions of e-glass weekly, visit http://news.glassmagazine.net/issues/.

Small Business 
Canada released six tips to successful succession planning for family business executives:

1. Make a succession plan five or 10 years in advance of any major changes.
2. Hold succession plan discussions with all family members in the business to avoid disagreement or hurt feelings.
3. Choose successors based on ability; consider selling the business if no family members are capable or interested in continuing to lead a company.
4. Don't give every family member an equal share in the company if he or she doesn’t have equal responsibility or involvement in the business. 5. Train a successor for a year or two before turning over responsibilities.
6. Look to outside consultants to help in succession planning.

Visit www.sbinfocanada.about.com for more information.