Planning for succession at family-owned companies can be fraught with challenges that can often be overcome with strategies that incorporate open communication and the careful consideration of the impact on all of those involved.
SFA recently hosted a webinar on the topic of Continuity Planning for the Family Business as part of the In the Know Webinar Series.
Separately, SFA News Daily spoke with three industry veterans about their experiences with succession at family-owned specialty food makers and their advice for business owners that are preparing for the next generation of leadership. Alexandra Groezinger is a second-generation owner and now serves as the president of Alexian Pate; Tanya Nueske is a third-generation owner of Nueske’s, and Harry T. Jones is a longtime specialty food industry veteran who has now has his own consulting firm, Cultivating Impact, advising companies on succession planning and other issues.
Following is what they said:
Alexandra Groezinger, president, Alexian Pate
My parents started the business, and my mom's been running it for the last 30 or so years. My father passed away when I was much younger, and she took over.
When I came out of college, I didn't want to come right into the family business. I wanted to work elsewhere to learn more about how other businesses were run so that I could bring all of that knowledge and experience back to the business.
My mom did some [succession] planning, talked to all of our senior staff, and they helped her decide how to best integrate me into the business. She spoke to the head of each department to make sure they were going to be OK with bringing me in, and to ask them for full transparency — essentially saying that if I was not doing a good job, she needed to know about it.
It was important to all of us to make sure that I was the right person for this job. With the help of key staff, we figured out a game plan for how to best integrate me. I started learning under our operations manager, so I could get to know all the nitty gritty, day-to-day operations, to really understand how the business works, before I moved into executive leadership, and did strategizing.
That took a severe left turn when the operations manager I was training with left due to illness and didn’t come back. It shows that you can plan as much as you can to bring the next generation into the business, but sometimes things don't always go according to that plan. In fact, I think that the way it ended up was much better for me. The higher powers that be, somewhere in the universe, had a different plan. I was thrown into the fire, and learned all the day-to-day operations, from bringing in customer orders, getting those run through production, logistics, invoicing, everything. It provided a much better foundation for me.
That’s my advice for getting the next generation started in the business: they should learn how production works, how packing works, learn how to take customer orders, learn how to do some of the accounting — all of the day-to-day stuff.
At some of the business groups that I'm in, people said, “With succession planning, you should pick a date, and that's the date that your mom is going to exit." Neither of us thought that was a good strategy for us or for our business. We thought the better strategy would be more of a phase-out approach. Mom is now, as we call her, our president emeritus. She's not involved on a day-to-day basis, but she is there for project help and any guidance that we might need based on her 40 years of experience in this particular business and our industry.
Harry T. Jones, Cultivating Impact
Every situation is different, but generally, awareness and intentionality are always wise. It's really the responsibility of the CEO or majority owner to take the initiative and start the planning process. They need to think about what they would like to have happen, then involve planning professionals, and then ask the members of the next generation about their desires.
One of the things that happens in planning for the next generation is that a plan is developed, and then it's put on the shelf. Having the professionals look at the plan annually, and having a meeting of the family members where everyone is reminded at least of the highlights of the plan, is really important.
Also, planning for the next generation should also include spouses. Another important element is that if members of the family anticipate coming back into the family business, they should spend at least three years in another business, developing a skill or talent that the family business needs. This accomplishes a couple of other things. One, it establishes the market value of that individual, and what their compensation should be, and it also allows the family member to develop their own self-worth and identity.
It's also important to use well-qualified planning professionals — it's worth it to get good advice.
In addition, when there are some members of the family who don't work in the business, and there are other members of the family who do work in the business, it's important to address that they have different agendas. Allow those who are not in the business the opportunity to either receive other assets or to sell their stock and support those family members who decide to stay in the business. There are also times when the family has to make a call — it may be that the eldest is not the most qualified. It may also be that the most qualified person to lead the business is a non-family member.
It’s important to be fair so that the family members have the same levels of accountability as non-family members. When you do promote non-family members into leadership positions, it encourages other non-family members to stay with the company and see opportunities for growth. I think it also challenges the family members who are there.
Tanya Nueske, CEO at Nueske’s
My grandpa started the business, then my dad and uncle took over. Now it’s me and my brother in the business, and I also have a young son.
Dad’s wish was always to have a family member at the helm, and we do our best to keep that promise, but we want to have great leadership throughout the entire company. We have a strong management team in place. That’s very important to me — to have great leaders who know what’s best for our people, and that makes it great for the business.
My advice is to surround yourself with a lot of great people who have your best interests in mind. Have great management people, and great outside help, and then you also have to just trust your gut once in a while. Really, it’s about treating people the way they need to be treated. If you take care of that, everything else will take care of itself.
We do have plans for the future in place, and we chose trusted advisors to help us along the way.
It’s a family business, one brother is in the business (as supply chain manager), and my other brother is working with my mother on an alpaca farm.
You have to love what you do. That can be a hard thing, but it’s not so hard when you are working in specialty foods. This industry brings a lot of people from different walks of life together, and it’s very exciting to me.
Editor's Note: Want to share your experience with succession planning for a family business? Weigh in on the topic here at the specialtyfood.com Community Hub.
Related: SFA In the Know Webinar: Continuity Planning for the Family Business; Q&A: Restaurants Weigh Impact of Inflation