Hey…, I Thought It Was My Turn!
We operate in an industry ripe with second, third, and even fourth generation ownership. The advantages to generational ownership are many. Obviously, company culture can provide a great benefit for its employees, customers, and even the community. There is an accountability and pride of ownership that frequently leads to service and quality levels far better than larger providers. Family owned companies typically boast much greater employee retention rates, and especially greater customer retention rates. The advantages allow independents to compete against huge companies with much greater buying power, more formalized training, and virtual armies of support for sales, marketing, administrative, human resources, fleet, equipment, and other areas.
The challenge comes when there is a change at the top. Transition from one generation to the next can take years, and even decades. New ownership may have changes in vision and direction for the company that is not always received well by the outgoing owner. I spoke with one owner that had been “given the reins” by his father and decided to go a different direction from his dad in the sales organization. The new owner was going to delay increasing sales staff to focus on some other areas. His plan was communicated, but the next day he walked in on his sales manager interviewing for a new salesperson at the direction of his “other” owner! How often do we put our people in the tough position of deciding which instructions to follow? This Sales Manager had worked for the father longer than the son and was reasonably irritated at being put in the position of needing to decide which owner to follow. Conversely, how often has an employee known how to manipulate a gray area when it came to ownership and who’s in charge of specific areas? I know in my house my kids knew which parent was the easier mark in certain areas, and of course we had to be on guard that they would go to the other parent if they did not get the right answer from the first parent. That was tough in a house with two kids, so I can only imagine if there are dozens or even more that learn how to shop for answers!
How many times has it happened that a “retired” owner swoops in after not being present for weeks or months, and disrupts everything? It’s possible they are offended that practices and policies they believed in for years have been changed. It may be that personnel or budget decisions were implemented completely counter to their style or experience. Whether it is a change that needed to happen or whether it was rejection of past practices, it is still a situation that should be expected and dealt with. One owner shared a story where their parent came in after a long time away and decided after walking through the plant that there would be a new rule that no employees could have exposed tattoos. A debate ensued that did not necessarily place the priorities of the business first. Both “sides” must seek to understand the other and commit to prioritizing the employees, customers, and then the company. For this owner it was a major distraction, and not the only challenge that would come as a result of generational differences. Culture change typically works better when it is more of a culture shift than a complete departure or rejection of past practice.
One commonality through it all is that new owners genuinely respect and appreciate the years of knowledge and experience of their predecessors. They wonder if they have the stomach and drive that they witnessed since they were a kid. They also make plans to remember all of the things their parent did to drive them nuts and make the transition so difficult for all parties. They swear they will remember how challenging their parent made it and vow not to do the same. One new owner we spoke with earnestly pleaded that we share the secret to retiring his dad, as he has had no success, and needed help. This particular owner joked that he was going to have his father committed because he knew of no other solutions, and the biggest change he noticed was how much more he was drinking because of his father’s involvement!
There are obviously no simple answers, and each situation has varied personalities, environments, and circumstances that must be considered. Let’s face it, we are dealing primarily with strong personalities, and with people that have a lifetime invested in this business. It’s difficult to let go when something is that much a part of their identity. The starting point as with most transitions begins with communication. Remove the vagaries and be honest about expectations. Owners transitioning out must be honest about their fears, and realistic about their new role. This is not an exhaustive list, but may help your parent be more willing to find a path to full retirement:
• Lead every discussion with what is best for the employees and customers of your business. Agree up front between you that the best decisions for the future of the company are prioritized by employee, customer, and then company. You may not always agree on details, but using this approach can avoid wrong thinking, and may lead to the inclusion of others in decisions.
• Decide on specific roles if your parent absolutely will not stay out of the business right now. Clearly state which areas you and they oversee and agree in principle to stay there. Communicate to your employees the defined boundaries and your expectations. Your employees are probably as frustrated as you about having multiple bosses. They will see this as a benefit so over-communicate and enforce these boundaries.
• Our research shows that the more successful new owners had clearly defined strategies, specific goals, and a long-term vision for the company. Communicating this to their predecessor gave them the security to step away a little easier. Remember your predecessor knew you when you were not such an organized planner, and visionary leader. They may remember a time when they doubted you possessed what it takes to run his/her company. Remind them that you were trained by the best. Do not just tell them it’s your turn and “you got this,” give them hope and trust in your plans for the company.
• Keep them updated on the progress of your business and your business plan. Most will find it easier to stay at arm’s length when they know things are going as planned and will continue to follow your plan.
• Ask their advice on decisions whenever there is something you need help on. Including them on decisions will give them enough involvement but be prepared that more often than not, you will need to implement their advice and give them credit for it. Thank them for their wisdom and input, and the role it played in your overall plan. Encourage them at an advisory level so that they can stay involved, but at a level you can manage and anticipate.
One of the great things about this industry is how the independent laundries are still able to not just compete but thrive. The culture of really knowing your customers and partnering with them for mutual success and benefit is alive and well. Navigating through generational change is just one of the ways to ensure that future generations will have the opportunity to face the same challenges. Remember this when it is your turn to hand over the reins.
Gary Dean, Consultant