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Family Business Case Study

Client: CEO and COO of a Small Family Business

Client Type: Family Business

Overview: RDA was brought in by the owners of a family-owned business with complex relationship issues at a time preceding an anticipated leadership transition. Following individual and group coaching sessions, RDA was able to help the leadership separate personal issues, and codify practices through formal policies to allow the leadership group to focus on business issues without personal complications. At the end of RDA's engagement, the client was well-positioned to begin developing a transition plan.

Services: Succession Planning, Organizational Systems

Challenge: Bob, founder, CEO, and owner of a 20-year-old, closely-held business, hoped to groom his 30-year-old son, Jack to take over the business in the next five years. The firm was currently co-run by Betty, the COO and Operations Manager. She was a long-time employee of the firm, and also had been Bob's life partner for most of that time.

Both Jack and the firm were at a critical juncture — if Jack and the firm did not make a mutual commitment to each other in the next year or so, Jack would likely pursue alternative career options, closing a window of opportunity. And yet Jack was not privy to many of the decisions and financials underlying the company — information that would allow him to make an objective decision about his future role in the firm — and no plan existed to manage the transition (e.g., stock buy-in plan).

Jack and Bob's personal relationship had grown estranged, and both prone to intense emotional responses to work and personal issues. In addition, Betty felt that Jack did not accord her appropriate respect in her role as COO, and was therefore concerned about her professional future as COO under Jack's leadership; she was also anxious that any transition be smooth to enable her continued personal relationship with Bob, the owner. The emotionally-charged relationships between the three key players resulted in both personal and professional command-and-control conflicts, preventing the three from working together to develop a smooth transition plan.

Furthermore, Bob's existing will did not reflect his stated succession plans, thereby making relationships with Betty and Jack even more complicated. Richard Dana Associates was engaged to help bring to light the interpersonal conflicts, to develop an action plan to bridge the communications gaps, and to start building the foundation for a longer-term succession.

RDA's Role: RDA began by conducting numerous strategic interviews with the three players - both as individuals and in groups - to identify and air both personal and professional obstacles to a smooth transition. Each person aired their own particular concerns and articulated their specific personal goals. Based on these discussions, RDA worked with the three key players to identify concrete goals and changes including:

• Implementing unambiguous job descriptions to clarify roles amongst Bob, Jack, and Betty.
• Developing clear, formal, consistent policies and expectations and following-through on their application to the entire firm. Both Bob and Jack had historically skirted many informal firm policies, leading to conflict with Betty and poor impressions among the staff.
• Initiating leadership training for Bob to help him to both set limits on Jack's unproductive behavior, but also to begin training Jack for future leadership.
• Forcing Bob to be less laissez-faire, and more pro-active in giving Jack both a macro and micro understanding of the business so that he might assume leadership in the desired timeframe (e.g., adopting job shadowing, mentoring techniques).
• Identifying specific times for Bob and Jack to repair their personal bond through everyday interactions (e.g., having coffee together to have some dedicated face-time)
• Sitting Betty and Jack down for RDA-facilitated meetings with clear agendas where they could vent, articulate underlying issues, identify the impact of their conflicts on the business (both psychologically and operationally), extract a workable foundation, and craft specific goals
• Individual coaching for Bob, Jack, and Betty to help them examine and address their work issues objectively.
• Training in basic communication skills and relationship-building including using non-confrontational language, setting clear business agendas for interactions, emailing meeting summaries and assignments, objectively clarifying any differences that arose.

Results: Through the course of RDA's engagement, the requisite underlying systems were put in place — job descriptions, policies and procedures, communication skills training, and relationship building. Jack was able to work at the firm productively. The dysfunctional behavior had stabilized and the three were better able to separate their business identities from their personal conflicts, and had begun working more as a team. The benefits of their improvements spread to the rest of the organization in the form of improved trust, increased productivity, and a less emotional work environment. By eliminating the personal obstacles, Bob and Betty were ready to envision a succession plan.

RDA facilitated additional working sessions with Bob and Betty, to focus on their personal and business priorities. Because they were able to better isolate their business and personal issues, Bob was well positioned to consider the viability of a leadership transition, while factoring in historical financials, current economic conditions, compensation for the key players, his estate plan, a potential buy-in plan, and a tangible transition plan.

Due to the complexity uncovered throughout the engagement, Bob realized he needed more time to prepare to leave the business — on some levels he just wanted Jack to run it; this was not an attractive choice for Jack. Based on their work with RDA, they were able to confront a much clearer choice, with an objective understanding of the factors impacting all three parties.