Let’s consider two case studies of former clients of ours where personality assessment tests made a huge difference as these family-owned businesses considered succession alternatives.
Business: High End Retail Jeweler
Age of Business: First Generation
Family: Mother, Father, four children (three sons, one daughter), two of whom work in the business
Business Case: Parents have worked hard for 30 years and built up a $10 million business with a stable customer base. Father is Chairman and Mother is President. They appreciate the work of both of their sons and notice that the eldest is a gifted salesperson and the youngest appears to be both more interested in and better at the back office part of the business. The other two children are not involved in the business. The parents are interested in pursuing other interests, including a potential run for the state senate, so they are “ready” to consider succession. They are both in good health and in their late 50’s. They have been wanting to talk with both of their sons about succession and even thought they might try putting together a “succession plan,” but they are a little intimidated by the prospect and frankly are concerned that when they finally do create a plan, the eldest son will feel “passed over” and that it might cause disharmony in their family. They also realize that even after creating a formal succession plan, there will be at least a few years during which they will have to work closely with their youngest son to groom him.
We began our engagement with this family and requested that we all meet together, including the children who did not work in the business. We asked the parents to invite their children, with the focus of the meeting as “business continuity.” We had an informal meeting with the family just to introduce them to what we do and to begin to probe the general “health” of the communication, and to calibrate the openness of all parties to begin talking about generational transition for business continuity. We congratulated them on taking an important first step at a time when business was good and there was no immediate threat to the business. We introduced the idea of each person taking a personality assessment so that they all could “reintroduce” themselves in terms of their temperament, their learning style, their leadership style and their working styles. They thought it might be fun and interesting to see the differences. We then met with each member of the family privately to go over the results of the assessment so that each of them could ask questions and begin to express how some of what they learned might explain communication patterns in the family and in the business. We asked permission to share family members’ assessment results with one another. At a subsequent family meeting, we facilitated some fun activities that accentuated their strengths and differences. We divided them into groups of two and ended this session with the question, “Knowing what you now know about each other, how would you go about creating a succession plan that would lead to business continuity?” This showed that there are many ways to solve a problem. We introduced the notion of a “process” over the next several months, where we assisted in crafting a succession plan everyone felt comfortable with and which they all would feel a part of. There were a few additional assessments used with the sons who worked in the business and with the mother as the owner over the next few months. Eight months later, after working closely with all parties, the two sons and the mother agreed on a draft of a succession plan that they would present to the father and the other siblings, identifying a specific path for the youngest brother to take toward the role of president.
Business: Global Manufacturing Company
Age of Business: Fourth Generation
Family: Father, six children (four sons, two daughters) all of whom work in the business (four on the manufacturing side and two in functional areas, HR and Finance)
Business Case: Father is chairman and CEO and is in his early sixties, with a number of chronic illnesses, variably managed. The business is in very good health, with revenues exceeding $20 billion. Family meetings are fraught with sibling miscommunication and rivalry. The father is reluctant to retire, fearing that the business will fail. He views his children as reasonably competent, but none of them seem to have “all of what it takes.” When he’s honest, he even agrees that none of them are “him.” He knows he must retire soon. He wants the family business to continue as a family business. He would like to identify which of his children has the best chance at succeeding. He is open to a “shared leadership” concept but doesn’t have any real confidence that it can work since he has been the strong epicenter of authority for 42 years.
We began the engagement with this family by being invited to a regularly scheduled family meeting. The father was fairly quiet, but the siblings were quite vocal with questions that were important to them. Essentially, they each wanted to know if our process would help “move their Dad along.” We explained that we were strong proponents of “data driven” succession planning. The data in this case is comprised of each of the personalities, skills, behaviors, attributes and experiences of the siblings and the father, as well as each of their ideas about where the business is going, how it is going to get there and what part each of them wanted to play. We explained that we use a combination of assessment tools and direct observation as well as deep interviews to obtain the data. As the meeting progressed, it became quite evident to us that information about the succession process was a critical need for each of the family members. We published a calendar for the process and began work with family members and the entire family against a specific process schedule. After assessment tools (including predictive, descriptive and 360 assessments) were administered, scored and debriefed, we worked intensively with the sibling group intensively to craft a defensible straw man succession strategy that they could present for their father’s consideration. At the end of 18 months, the siblings came up with a proposal for their father regarding the roles each one thinks/feels they are a “best fit” for. The father was quite impressed with the insight and detail of the succession strategy and is currently reviewing it with his executive committee and financial advisors.
Family-owned businesses face many challenges and considerations as owners consider succession plans. As these scenarios illustrate, proven descriptive and prescriptive assessment tools provide a rational basis for creating a succession candidate pool. If parents decide that their heir or heirs are the candidates to be considered, these tools can provide a useful benchmark for their development. Either way, the rational baseline will have been established—leaving the way open to consider the decision using all of the measures that have helped make family businesses great—their passion, their values, and their sense of family legacy.