Jim Waldron, CEO of Capitol Enterprises, an entertainment centre business, is struggling with his son-in-law's increasingly difficult behaviour. Jim owns an entertainment complex with function rooms. Recently, he has expanded the facilities by buying up abutting land and expanding the building complex. At the same time, Jim is concerned about creating a succession plan and this growth has put financial pressure on him and on his plans for retirement.
Jim's daughter, Sarah, is Vice-President and Chief Operating Officer of the company and his son-in-law, Jake, a temperamental person with strong opinions, is the Facilities Manager. All three comprise the executive management team and the board of directors. Sarah, who is quite effective in her current role, wishes to become Jim's successor with one caveat: she is interested in becoming CEO only if she shares leadership with Jake. She and Jake envision being co-leaders of the company even though Sarah would be the sole owner and would have the title of CEO. Jim, however, envisions his company with one leader and certainly not with Jake as a co-leader. Jim is also concerned because he sees Sarah holding herself back as a leader because of Jake's behaviour.
Jim views Jake as a liability. Jake is often argumentative and confrontational with Jim and other employees. Jim does recognize that Jake has strengths and talents in running the facilities with some good diagnostic and problem solving skills. At times he can be quite understanding and compassionate. Yet, at other times he oversteps boundaries, yelling at and berating employees.
Jim's relationship with Sarah is somewhat strained, though still cordial, because of tension with Jake and because Jim was a hard-working and distant father over the years. Sarah sees Jim as rather remote, with high expectations that are difficult to satisfy. Sometimes it appears that Jake expresses resentment at Jim on Sarah's behalf. Jim very much wants a relationship with Sarah and is saddened by their distance. He fears that he will lose his daughter if he takes a strong stand. Yet, more and more employees complain to Jim about Jake. During the winter months when Jim is on holiday, Jake's behaviour at work becomes increasingly difficult and off-hand, as he feels able to be more confrontational when Jim is not present.
When Jim returns and attempts to deal with Jake, Jake gets furious and Sarah defends Jake, while pointing out to her father his own shortcomings. Jim also knows from hints from Sarah that all is not well in her marriage. So Jim has mixed emotions, as he does not want to be responsible for disrupting his daughter's relationship with her husband.
The situation deteriorates as Jake's unacceptable behaviour escalates, as Sarah refuses to address Jake's behaviour and as Jim is immobilised even further. Normally a strong and decisive leader, in this situation he has become inconsistent and unable to act.
Both the family and the business in this case have ended up in a rather impossible situation. The advice to talk it over would not be very helpful. Jim tried this approach when he returned from his holiday, but he was not very successful. The communication possibilities of the family seem also to be restrained by historical feelings of guilt and distance. Both Sarah and Jim seem afraid of taking action because of what they think the other would feel. However, since they have never had a close relationship, they can't be really sure what the other feels.
At the present time, there is an urgent need for action. The expansion of the business has caused stress and the family situation is very strained. There is no succession plan. If Jim doesn't act now, he runs the risk of losing both the company and his daughter.
My advice to Jim is to get some outside help to deal with the situation. I would suggest that he expand the board of directors with two external members who are knowledgeable about the dynamics of family business. Coming from the outside, they could offer an objective point of view and could assist in developing a succession plan. The present situation with the same people holding positions in both the board and the management team is anything but healthy for the business.
Moreover, there are good reasons to question Jake's board membership. His membership does not appear to be due to his position in the company. Taking in external board members could be a good 'excuse' for changing the whole composition of the board.
The suggestion to take in external board members runs the risk of increasing family tensions. However, it seems to be a positive way out of a difficult dilemma. Jim, as the owner, is the only one with the power to make such a change. It is doubtful that Sarah, once she inherits the business, would have the strength to make the changes necessary, given the tensions in her marriage. Making these board changes now is a way that Jim can support and protect his daughter and his company in the future.
Annika Hall is a business researcher at Jonkoping International Business School, Jonkoping, Sweden.
Jim, Sarah and Jake all have their own visions of the future of the business and the roles they would take: Jim would like to see his daughter be CEO; Sarah would like to share the responsibility with Jake; and Jake may share Sarah's perspective. If they are going to solve the dilemma of succession, they must have a common, shared vision for the future. Without this, it is difficult to develop a plan that addresses myriad questions such as: "Who will own the business and how will the transfer happen?"
Most importantly, a shared vision provides a context for dialogue on difficult issues and leverage for changing the family dynamics. If family members can all agree that they wish to keep the business thriving for the future, then they can explore the requirements for such a future: eg, a stable group of employees, good reputation among customers and the community, etc. The family can then explore the issues that may interfere with these requirements, seek outside (objective) feedback on how they are doing in those areas and then join together to address the challenges they face.
All too often, individuals in families and their advisors seek the 'magic solution' that will immediately be accepted by all parties so everyone will live happily ever after. A solution that is arrived at through a dialogue among all stakeholders, yielding clarity of direction and a game plan to which all are committed, has a much greater probability of successful implementation.
So, the first step is for Jim to convene a meeting with Sarah and Jake to discuss the future. This meeting is the beginning of succession planning. The agenda should include gaining an understanding of what each person's dream is for the future and to see if there is a common
If an atmosphere of safety and "seeking to understand" each other is established, then family members may drop dogmatic positions and become open to a range of options. Hopefully, Jim would demonstrate mature leadership and show his daughter his genuine interest in her security and growth, as well as his own security. This could open the possibility of Jim and Sarah building a strong relationship for the future.
Leslie Dashew is the President of the Human Side of Enterprise and a partner in the Aspen Family Business Group. She is an organisational development consultant, family therapist and family business consultant in Arizona, USA.