Mar 29, 2011

Succession Stories: The Good, the Bad, and the Ugly

 

Succession Planning Can Get Emotional

Pete Walsh loved working for Walsh Bros. Office Equipment in Phoenix, the family business his grandfather started back in the 1950s. By the time he was 36, Walsh had risen up the ranks to claim the title of vice president, where he reported only to his uncle, the company's president. But even though he was given the autonomy to run an important division, Walsh thought he was ready to run the whole show.

The problem was his uncle, then 55, had been running the business for 30 years and wasn't ready to step down. "My uncle told me he planned to run the company for another 10 to 20 years," Walsh says. " I told him that I didn't want wait that long." Feeling frustrated and disrespected, Walsh left the company to start his own consulting business, Peak Performance Coaching. That was 12 years ago. Walsh admits that his family was shocked and surprised when he decided to leave, but he now knows it was the best thing he could have done – especially after his uncle sold the business in 2009.

"In my business today, I see so many kids coming up in the family business who think they're ready to take over but they don't yet have all the skills in place," says Walsh. "That's when people get frustrated and resentful." Walsh now counsels family businesses on how to break free from the emotions that often can wreak havoc with life at work and around the holiday dinner table. "In most cases, as soon as things get emotional, they start avoiding an issue," he says, noting that bringing in an outsider like himself could have helped he and his uncle work through their own issues. "But if you don't spend the time to communicate and put a plan together, you can create forces that blow up and cause irreparable damage that can last for generations. What should be a source of joy becomes a major discord for a family."

Lesson learned: Make time to plan ahead and bring in an outsider to work through emotional issues.

Sometimes You Need to Let Go

Entrepreneur Irving Feld made a shrewd investment when he purchased the Ringling Bros. and Barnum & Bailey Circus in 1967 for a reported $8 million. But hiring on his son, Kenneth, three years later proved an even better business decision. The father-and-son team soon reinvigorated the 141-year-old circus, making it again worthy of its title as "The Greatest Show on Earth."

But the younger Feld didn't stop there after his father passed away in 1984. Under his direction, Feld Entertainment grew into the largest provider of live family entertainment in the world, where some 30 million people around the world buy tickets to the circus as well as other smash hits like Disney On Ice, which began in 1981, and motor sports events like Supercross, which started in 1997.

More recently, Feld, now 62, has taken a lesson from his father and welcomed his three daughters into the business: Nicole, 33; Alana, 31; and Juliette, 27. Before they were hired on, however, each of his daughters spent at least a year and half working outside the business before they returned. "It's tough to be the boss's kid," says Feld. "I think it's the hardest position in the company because the expectations of you are so much greater. I figured that if my girls worked elsewhere first, they would bring in valuable skills from the outside."

For daughter Nicole, that meant working for two years at People magazine before the call of the circus, which she now produces, brought her back to the family business. "There was never any pressure to come back," she says. "I decided to come back because I thought I could make a difference."

To put his daughters in the best possible position to succeed, he has recently taken a step back from taking an active role in decision making. "If this business is going to remain relevant by changing and evolving, it needs new blood," says Feld, who also hired a president and COO named Mike Shannon to whom his daughters report to. "It's conceivable that the business will continue to thrive another 60 years, most of that without me. I would rather have my daughters get their feet wet now when I'm around to offer advice and ask the tough questions."
 
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Darren Dahl is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.