ELITE ADVISOR BEST PRACTICES
Adjusting a Business Father’s Dream - Part One
When clients realize the dream for Next Gen is fading
By Tom Hubler
- Succession planning is tough for all owners—even tougher when a younger daughter or stepson may be more capable than a firstborn son who ’s working in the business.
- Unless you are proactive or positive, anything that happens in the family can affect the business.
- A common vision is a practical, proven way to ground the family and inspire members to trust one another and share in the sense of abundance.
This is a story about how an entrepreneurial father watched the dream for his children erode into a nightmare with seemingly no avenue to a happy ending. It contains impossible dilemmas and no-win situations, in which relationships are sacrificed and families become divided. It is a true story, compiled from my own experience. Unfortunately, as many advisors know, it occurs all too often when members of a business family lose their way.
I can imagine the father, Roger, looking down at his newborn son, Rob, with joy knowing that his boy is the heir who would someday take over the family business. Roger grins at his wife, Paula, Rob ’s mother, whose shy smile reveals a quiet, soft-spoken follower and supporter of Rob. Rob ’s personality mirrors that of his mother—he is devoted to her. Although he does not appear to have the natural leadership of a company president, Roger still hopes that his boy will be able to take the reins from him some day.
All this occurred, of course, decades before the family asked me to help resolve their concerns. Had I been brought in earlier, I might have helped them catch issues earlier by holding an orientation meeting. But a dilemma was already growing. And it became more complex when Roberta, Rob ’s younger sister, was born. She was remarkable like her father—bright and assertive. Even at 19, she was clearly a charismatic woman who exhibited solid leadership skills, and she was the opposite of her quiet, hesitant brother. As you would expect, Rob and Roberta grew up at odds with each other, competing for their father ’s attention and not respecting their differences. The dilemma was getting more complex.
During those early years, Roger committed long hours to the business and struggled with his use of alcohol. The work and the drinking took a toll on his marriage. Had I been helping the family at this early stage, I would have suggested (and helped them create) a common vision during the planning phase of the process. A common family vision is a practical, proven way to ground the family. It inspires each person to contribute to the common good of the family out of love, generosity and sense of abundance. It encourages family members to trust one another, realizing that if they contribute, others will contribute when their turns come along. It is a bond that helps a family in crisis become a family in harmony. But Roger ’s family didn ’t build a common family vision (like the one below) until many years—and many heartaches—later.
Common family vision
In our family and business we promote respect, honesty and fairness, and encourage an environment that is loyal and unified. At the heart of our vision is our commitment to generosity and quality, and an appreciation of each other ’s gifts. As a hardworking and dedicated family, we communicate and celebrate our spirituality.
Without a vision, Roger ’s family continued to grow apart. Roger and Paula divorced. Roger lost his loyal, supportive wife. Rob, now a teenager, lost his mother ’s ready attention and understanding. The divorce deepened the emotional wedge between Roger and Rob. Rob resented his father for, in his mind, betraying his mother.
Roger realized that his drinking contributed to the divorce and distanced him from his children. If Roger ’s clan had been working on the family vision, I could have helped them implement a plan to resolve the issues raised during my interviews with them as part of the discovery phase in my Vision for Success process. Through those interviews, I gather many different opinions and perceptions from family members, which helps me develop the foundation for a common understanding of the issues, concerns and challenges in the analysis phase.
Once we identify the major issues, I prepare a report and present it to the group at the family business planning meeting. Here they can discuss the plan, and add to or remove anything that ’s not agreed upon. This becomes the action plan that comes out of the planning process. In my interviews, I found that Roger ’s children reacted differently to their father ’s drinking—Rob was put off while Roberta seemed to grow closer to her father. Perhaps their push-pull encouraged Roger to start attending A.A. meetings, almost by accident. To his credit, he has remained sober ever since (more than two decades).
When the firstborn son is not the right choice
As the years rolled on, family members continued their individual lives while the family itself seemed to hold together, perhaps mostly by not examining the larger issues between the siblings and their dad. Roger married again—to a lovely woman named Virginia. Rob married Kitty, completed vocational school and was working in the company warehouse for the family.
Roberta completed college, also married, and was on the fast track to management at a local bank. She was being considered for a high-level promotion and, despite her close connection to her father, told him that she was not interested in working in the family business. However, Roberta ’s husband, Patrick, had joined the family business and was showing great promise. He was eager to take on more responsibilities and had proven his capability.
Roger ’s problems were growing. He knew his son was not capable or prepared to lead the family business. Rob did a good job in the warehouse, but he lacked ambition. He regularly left at 4:30 p.m. and would “step over ” work if it wasn ’t a part of his job description.
Roger ’s daughter was not interested in the business, but his son-in-law was very determined, and would likely leave the family business if he was held back. This is where a facilitated, formal succession plan would identify these dilemmas and bring forth a plan to deal with them. It could have been developed in the analysis and planning stages and then implemented. Briefly, the plan prepares and carries recommendations in four critical areas:
- Ownership succession issues, including an estate plan, financial exit strategy and board of director responsibilities.
- A management and leadership approach that considers the career of the son-in-law, Patrick, as well as a family participation plan of ground rules on how adult children will be trained and compensated.
- A business plan, which is vital whenever you have multiple owners of a company.
- A well-considered family plan that helps everyone be a family without the undue influence of the business, and builds emotional equity in the family while simultaneously building equity in the company.
Unless you are proactive or positive, anything that happens in the family can affect the business. Family suffers if the business isn ’t going well. Business becomes discomfiting when the family isn ’t doing well. It is important to have the emotional equity to get over the bumps in the road.
Unfortunately, the family was not doing any of these things. To further complicate the situation, Roger ’s marriage to Virginia was falling apart, and they were in the process of seeking a divorce. Kitty, Rob ’s wife, had grown attached to Virginia and openly criticized her father-in-law at family gatherings. Roger was greatly offended to the point that he thought about disinheriting his son so that Kitty would not be able to gain from the company stock. Rob supported his wife, and the gulf between him and his father deepened.
The stresses and anxieties and unrealized dreams of this family had become insurmountable to Roger. His dream for his son was gone, his daughter was moving in another direction, his second marriage was crumbling, and his son-in-law was threatening to look for another career. Rob and Patrick were like water and oil. The dream Roger had of his son and son-in-law working together was shattering.
And this was when Roger and I finally met. He told me his goals: preserve the company, maintain family harmony, create an equitable ownership transition, build a high-functioning leadership team, and have all employees continue to be valued for their contributions. No small task.