Guidance for Generation Succession

December 1, 2008
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Banding together in hopes of producing the winning chili at the Masters of the Game conference are (from left) Jordon Roper and her father, Russell Roper; Greg Knisley; and Serge Laredo. The Ropers and Laredo are with North Shore Plumbing and Heating Co., North Vancouver. Knisley is with Knisley and Sons, Holidaysburg, Pa.

DALLAS - You just never know what you are going to experience when you sign up for a Masters of the Game conference, put on by HVAC Learning Solutions, which operates under the umbrella of Lennox Industries.

The 12 contracting firms that participated in the latest event, held Nov. 3-5 at the Warwick Melrose Hotel in Dallas, came to learn more about generation succession, how to go about it, the steps necessary to make it happen, and how to handle family-owned business issues. In the process, each of the 25 attendees:

• participated in a different type of team-building exercise: a chili cook-off. (Who knew?)

• found himself/herself trying to keep a multitude of colored balloons in the air, a stress-relief practice introduced by consultant Catherine Stakenas of CPS Corporate Consultants. (And, yes, some really embraced the exercise, going to extremes to keep balloons from hitting the floor.)

• experienced the game “Win as Much as You Can,” hosted by Jim Hutcheson, founder of ReGeneration Partners, a global family business consulting company. (In this session, a few had to master the art of negotiating, a skill Hutcheson said is needed with family-owned businesses.)

This was the first time Michael Moore, director of training at HVAC Learning Solutions, opted to tackle the subject of generation succession. Based on some of the comments from the participants, Moore might consider offering the three-day conference again next year.

“The Masters of the Game event was a very enlightening event,” shared Danny Jackson, who came to the event with his brother, David, both from Jackson and Sons Heating and Air Conditioning, Dudley, N.C. “We gained new perspectives on relationships through team exercises and challenges. This heightened our awareness of the complexity of relationships in a family-owned business.”

Consultant Catherine Stakenas (left), of CPS Corporate Consultants, answers questions.

LEARNING ABOUT DISC

The main thrust of the initial day of the three-day conference revolved around learning and understanding the DiSC theory. As explained by consultant Stakenas, DiSC is a model of human behavior designed to help people understand “why they do what they do.” The dimensions of dominance, influencing, steadiness, and conscientiousness make up the DiSC model and interact with other factors to describe human behavior, she explained. Originally created by Dr. William Marston at Columbia University and researched and updated by Dr. John Geier and Inscape Publishing at the University of Minnesota, the DiSC model and its training assessments and various other tools have helped over 35 million people in 25-plus languages over the last 40 years, said Stakenas.

“DiSC should be a part of your leadership program,” she told her audience. “Some of the answers it provides include understanding your behavioral tendencies, how your behavior affects others, and allows you to develop strategies for working together to increase productivity.”

David and Danny Jackson vouched for the DiSC system. The brothers instituted the process several years ago as a tool to help managers.

“Yes, we do utilize the DiSC program in our company,” said Danny Jackson, who provided specific uses for the system with his fellow contractors. “We utilize it during the interview process to help determine where the potential co-worker might fit in our organization. We use DiSC when dealing with performance reviews or issues with co-workers. The DiSC program is a critical part of our career development process for our co-workers. It enables us to better understand our behaviors and how they may affect our co-workers, as well as why they behave as they do.”

Michael Moore (far left), director of training at HVAC Learning Solutions, goes over some figures with consultant Jim Hutcheson.

He quickly added, “This knowledge empowers us to create a positive family business culture that nurtures the co-worker and allows them to reach their full potential.”

In simple terms, Stakenas said the DiSC system allows a person to understand behaviors.

“Successful people possess behavioral self awareness,” she said. “They understand their reactions to others and situations. In other words, they grasp the importance of adapting their behavior to meet the needs of others and be effective in various situations.”

As she noted, self-awareness is “the cornerstone of effectiveness.”

“If you understand yourself, you will find you have more conscious control of your behavior,” she said. “You’re able to be more situationally effective.”

Stakenas had each participant complete his own DiSC personal profile. After going through a series of questions in an actual DiSC booklet, most agreed that the test pinpointed their respective behavior. (For a breakdown of the four behavior categories, see related story.)

“The DiSC action planner is a tool that allows you to assess another individual’s dimension of behavior,” she said. “It allows you to develop specific strategies to be more successful when communicating with that person.”

And, in a family-owned business, communication is definitely needed, she stressed.

While Henry Hutcheson (standing) looks on, attendees hash out an issue in the “Win as Much as You Can” game.

ISSUES WITH FAMILY BUSINESSES

Consultant Jim Hutcheson, along with his younger brother Henry, provided details as to why family businesses fail. According to his firm’s research, 33 percent will successfully pass into second generation, 10 percent will pass into third generation, and only 4 percent will get into the fourth generation. He added that 45 percent of CEOs that plan to retire in five years have selected a successor, but 31 percent do not have estate or transfer plans. “We all want to be a family-owned business, but don’t have the tools,” he said.

The basic difference between a nonfamily business and a family business system, he explained, is that, with the former, there is not an overlap between family and business. “And that is a greater differential,” he said. “A family is an interactive system and is interrelated and interdependent. A change in one part of the family system has an impact on other parts of the system, including the business.”

The first step in having a successful family business, he said, is “defining what success means to you.” Another requirement is in financial controls. He recommended having a dedicated trained professional handle the accounting side, using appropriate software, and having monthly review meetings, as well as weekly flash reports.

“If you do not review the financials in a disciplined manner, you are open to surprise,” he warned. “You need to have discipline to get to the financial matters.”

Other best practice tools and concepts he suggested included:

• Developing a family mission statement.

• Creating some independence within the board.

• Holding regular business board meetings.

• Establishing a family council and meeting regularly.

• Creating a family code of conduct.

Meeting in the hallway included (from left) Masters of the Game conference attendees Jordon Roper, Henry Hoff, Henry Hutcheson, and Jim Hutcheson.

“Just because you’re in the family, that doesn’t mean you get a job in the family business,” said Hutcheson. “When you think you are helping your kids by bringing them aboard, you may not be doing so.”

When it comes to family businesses, Hutcheson said communication is of the utmost importance. It’s why he had participants practice the art of “active listening.” He stressed that one needs to repeat what a person states (with the opening remarks, “If I heard you correctly, you said…”) and then conclude by simply asking, “Is that correct?”

“If the answer is ‘yes,’ then you have good communication,” he said. “If the answer is ‘no,’ then you need to clarify points using active listening.”

With strong communication and influencing skills, Hutcheson said conflict resolution and persuasion is possible.

“Anybody can become angry. That is easy,” he said. “But to be angry with the right person, and to the right degree, and at the right time, and in the right way, that is not within everybody’s power. That is not easy.”

In the end, Hutcheson recommended that each develop a “family employment policy,” along with establishing a written management succession plan. Succession, he defined, is reducing family and business uncertainty; transferring business leadership, management, and ownership; planning for the appropriate transfer of wealth; “inevitable”; how one will be remembered; and providing “peace of mind.”

“The biggest problem of wealth preservation and transfer is this: no thoughtful plan,” he said.

Sidebar: More About DiSC and Personalities

According to consultant Catherine Stakenas, organizations use DiSC assessment tools in their training and coaching efforts as a performance-improvement strategy. The most important benefit of the DiSC model is helping individuals understand themselves and others better, she explained. She noted that organizations then utilize the DiSC model to achieve the following outcomes:

• Improve collaboration and reduce conflict;

• Build results-producing teams;

• Develop effective coaches and managers; and

• Increase sales and service success.

“We also utilize the DiSC program when dealing with our customers,” explained Danny Jackson of Jackson & Sons Heating and Air Conditioning, Dudley, N.C. “DiSC gives a better understanding of their needs. Therefore, we can be more responsive and increase customer satisfaction.”

From the DiSC program, Stakenas broke down the four behavior categories in the following manner.

Dominant personality - If you or a team member is diagnosed as being dominant, strengths may include that you can make a decision when no one else wants to; are not afraid to confront tough issues/situations; can accept change as a personal challenge; and can keep the team focused and on task.

On the other hand, those you work with may see a dominant person as coming across as unapproachable; insensitive to others; impatient with others; and trying to get the team moving along before it is ready.

If one has a dominant personality, a person can become a more effective co-worker or team member by developing more patience, toning down one’s directness and/or asking more questions; plus working on one’s approachability. “Watch body language and offer more encouragement in conversations,” suggested Stakenas.

The Influencer - If you are an “influencer” co-worker or team member, your strengths may include that you are always available for others (“You give your time easily,” said Stakenas); are good at inspiring others; can spread your enthusiasm and positive attitude to others; and can easily give positive feedback to those you work with.

Those you work with, however, may see an “influencer” as disorganized; superficial in his/her approach; and lack in follow through. According to Stakenas, an influencer can be more effective to co-workers or team members by listening more carefully to what people really need; becoming more organized; and providing more detail.

Steadiness - If you have a steady behavior, this means you are a good team player; empathetic and sensitive to the needs of others; methodical and good at preparing meetings, agendas, and minutes; good at listening; and easy to get along with.

Having said that, those that work with a “steady” behavior may see that person as being indecisive, indirect, and/or resistant to change. To be more effective with co-workers or team members, a “steady” person needs to become more assertive and direct with others; cope better with change; and do not carry the burden of everyone else’s problems.

Conscientiousness - If you have “conscientiousness” behavior, your strengths may include that you are thorough; certain to follow standards accurately; conscientious; diplomatic; and accurate.

In the big picture, people view a “conscientious” person as being overly concerned with perfection, aloof, and hampering creativity in others with the desire to stick to the rules. To be more effective co-worker or team member, a conscientious person needs to better accept difference, be more open, and communicate more.

Publication date: 12/01/2008

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