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Following the Leader

By AICC Staff

September 13, 2018

In order to evolve and grow, dynamic converters must keep a close eye on their leadership talent and understand how best to develop it. Succession planning is an essential part of that process. While every management position can benefit from such a plan, preparation is particularly critical when it comes to finding the next company president.

In some family-owned businesses, succession simply may be a case of the next generation stepping in once Mom or Dad announces a decision to retire. Often, the younger generation will prepare for that role by spending a lifetime gaining experience throughout the company and observing how their parents have led. Add in the business discussions that can naturally occur during casual family get-togethers, and it’s easy to see how company life becomes an integral part of family life.

But not every family-owned converter fits this model. Some family-owned businesses must take a different approach to succession. Maybe there are no eligible family candidates for the president’s role. Or maybe the available family members prefer—or are better suited for—other functions within the company.

Whatever the reason, these companies must navigate the challenges that come with finding, vetting, and fully integrating an “outsider” into a business that was founded with and propelled by a family-driven vision.

When the current leadership chooses to look for a successor from outside of the family, it may make the most sense to start with those candidates who are most like family.

Like Family

When the current leadership chooses to look for a successor from outside of the family, it may make the most sense to start with those candidates who are most like family: industry colleagues with whom you have a long history and who know and understand your company.

When JB Machinery learned that the owners of its key manufacturer, XericWeb Drying Systems, were retiring, JB bought the company to ensure its manufacturing going forward. They renamed their acquisition XDS, and then began the search for the company’s new president. It was not long before they found Jeff DeVries.

“Jeff was an easy choice for us,” says John Bird, JB Machinery’s founder and president. “We had known him for over 20 years in a professional capacity, as a fellow colleague in the corrugated industry.” After repeatedly working with DeVries as he held positions with various manufacturers, JB Machinery’s need for an XDS president finally aligned with DeVries’ availability.

“We initially considered internal promotions and other approaches,” Bird says, “but there was nobody we could see who would be as ideal at leading XDS as Jeff. Our engineering skills are limited, so we needed someone to bridge the gap [between our ideas and manufacturing needs]. Jeff is the final piece in the puzzle and the keystone to our success at XDS.”

The situation was similar for Michael Gallagher, who succeeded founding president Jim Haglund at Central Package & Display (CP&D). “I had been familiar with CP&D before joining the company,” Gallagher says, noting that CP&D had been a vendor for Print Craft, where he had served as president. “Part of my responsibilities at Print Craft had been acquisitions. I’d been meeting with Jim in hopes that he would sell Central to Print Craft’s parent corporation. After several years, I realized we weren’t going anywhere. But, at the same time, he was looking for someone to succeed him.” That existing relationship led to Gallagher joining the company.

Presidential Preparation

Royal Containers has taken a different—and remarkable—approach to succession planning. President Kim Nelson, who took over the family company after her father died, has tapped current employee Terri-Lynn Levesque to take the reins once she retires—in about nine years. In the meantime, Levesque is being trained and mentored for her eventual role, even as she continues to handle her normal day-to-day workload.

Levesque has already demonstrated her commitment to Royal Containers. “Terri-Lynn started in the business as I did,” Nelson says, “working summers and working here during high school and college. So we’ve worked together quite a long time. By the end of the summer, we’ll be starting year two of a 10-year succession plan for the president’s role.” That may sound unusually forward-thinking, but, Nelson explains, “This kind of planning is part of our culture here. Every manager, every leader, has to be working on succession planning.”

Although a 10-year succession plan might be rare, the approach gives Levesque the time required to “walk in everyone’s shoes, do everyone’s job, and understand everyone’s role,” Nelson points out. “She needs to figure out how to get the best out of all the people working under her and make sure everyone’s engaged. The other part of the process is kind of throwing her to the wolves and letting her make a lot of bad decisions!” she adds, laughing. “But, of course, she’s not doing this alone. There’s a lot of interaction between us.”

Mentoring is particularly important when someone who is not a family member is stepping into the president’s shoes, without the benefit of years of observation and discussions. “How I mentor is pretty flexible,” Nelson says. “If I’m dealing with a very large customer, I’ve had Terri-Lynn come along with me and sit in as we deal with an issue, just for her to have the exposure. We all have to be flexible enough for her to experience different activities.

“But Terri-Lynn’s still also the office manager, so she does need to figure out how to balance her current job with the job she’s training for. I think through just experience and time you get good at balancing those things. We have good communication, though, so if she gets overwhelmed she’ll come into my office and say, ‘This is too much,’ and we work it out.”

Mentoring is particularly important when someone who is

not a family member is stepping into the president’s shoes, without the benefit of years of observation and discussions.

While a current employee may be expected to share the company’s vision for the future and appreciation for the heritage, those were not the most important criteria for Nelson when choosing her successor.

“I’m looking at values first and foremost, what you’re made of. Technology will change. Innovations will take us in different directions. Values remain throughout all those changes.

“This way of thinking comes naturally to us,” she continues. “We don’t hire skill or experience; we hire based on core values and whether you’ll fit in here and align with the rest of us. Because we can teach you anything. So it’s not about whether Terri-Lynn and I agree on a strategic direction for the future. We know we’ll need to work through that together. Instead, what was most important to me was that her values aligned with my own.

“Here’s what I mean about values: Terri-Lynn is authentic and honest. Employees, customers, suppliers all see through someone who’s just faking it or going through the motions. Authenticity is important. Another core value is responsiveness. You’ve got to have a sense of urgency about the job. You’ve got to be flexible and adaptable, forward-thinking. It’s also good to have a little bit of audaciousness, to push the envelope when you need to.”

The Personality of a President

Overseeing a family-owned business will often require strategies that differ from those of other companies. Gallagher recommends that prospective candidates for the role make the time for an honest personal appraisal and for open communication with the company’s current leadership.

“It takes a certain personality type to come in as a nonfamily member in a family-owned company,” he says. “As you work to develop and evolve the company, you have to find a balance, a compromise, with the people who started it. If you were a personality type that had difficulty with that, it won’t work out. There was a period of about 12 months from when we started talking to when I accepted the offer. We had plenty of time to reflect, discuss, and have open conversations.

“To be honest, I did say no to the opportunity about halfway through the discussions. I was 48 years old. At that time, you’re nearing the peak of your career. So I reminded Jim—who I knew wasn’t going to be an absentee owner—that I wasn’t wanting to be a backup quarterback and wouldn’t do well sitting on the bench. I needed to be truly involved. We clarified how it could work and focused on the positive. I’m truly amazed that Jim was so willing and open to respect my need for relevance and to do the role. That was very impressive on his part.”

Once in the job, a nonfamily president will need to figure out how to navigate the unique challenges that come with family businesses.

Once in the job, a nonfamily president will need to figure out how to navigate the unique challenges that come with family businesses.

“I know how to run companies of this size—$40 million—but I didn’t know how to run Jim’s company,” Gallagher admits. “There were cultural and family nuances to learn about. It isn’t always true with every family-owned business, but here the owner was in tune with every detail. He especially wanted to be involved when it came to personnelbecause often there were family members and long-term employees involved.

“In some ways, this kind of relationship is like a marriage. There have to be the same values of compatibility, respect, caring for one another. I understand Jim, and Jim understands me. You have to be very transparent.”

A True Success Plan

The question of family vs. nonfamily succession can feel highly personal for everyone involved. However, a leader’s lasting success is not ultimately measured by genetic testing.

Nelson remembers, “My father said to me that my success will be measured by the success of the next generation. That’s really stuck with me. My job is to make the next generation succeed. That’s incredibly important. The big challenge is figuring out how best to do that now.”

RobertRobert Bittner is a Michigan-based freelance writer and a frequent contributor to BoxScore.