Off to a flying start

Suzy Bibko is Editor-in-Chief of Families in Business magazine.

John Fentener van Vlissingen, of BCD Holdings, is confident in the decision to bring in a non-family CEO when he steps down in May. It was a well-structured process and involved all the family

A man with a plan. It's an apt description for John Fentener van Vlissingen, founder and CEO of BCD Holdings (BCD), one of the largest family businesses in both the world and the Netherlands. In the short span of 25 years, van Vlissingen has built a global travel services empire and kept it all in the family. He's off to a flying start and seems to be one step ahead in both business and family business matters – and though he is stepping down as CEO this May, he plans to keep it that way.

Setting up shop
BCD's story starts back in 1975. After working as an investment banker with Pierson in the Netherlands for 12 years, he formed his first company, which invested in US real estate, mainly in Atlanta, Georgia. It was the formalisation of what had really just been a hobby until that time.

"Sometime between 1975 and 1980, I hired my first employees. I was still working at the bank, and things were starting to get awkward because I felt responsible for my job at the bank as a partner and also for this new company," recalls van Vlissingen. "And when I would fly to Atlanta, I would be there for the weekend and be back in the office at the bank on Monday. So naturally my family and I said that this was absolutely crazy and I must make a choice. I decided that running my own company would be exciting. Since my background is from a family business, I think that might have also influenced my decision to start my own company." But due to some changes at the bank, van Vlissingen didn't devote himself fully to his own company until 1980.

The company chugged along, slowly becoming more and more professional, as any company does that builds itself. Then, around 1988, inflation went up, hitting the real estate market hard. Van Vlissingen realised that if his business was going to survive, they would need to diversify: "We said, let's talk to our clients and look at what area we're in (the service industry). We made a selection of different things we could do, among them the travel industry, our ultimate selection for three reasons: it was ripe for consolidation – there were 33,000 travel agents in America; nobody had ever bothered to think about technology in this area; and we were well equipped to work in the service industry."

In just over 25 years, BCD Holdings has evolved into a multinational company with more than 9,000 employees and 20 daughter companies operating in 11 countries. BCD is considered a market leader in business travel services, which accounted for 86% of the company's earnings in 2002 (US$4.2 billion). WorldTravel BTI (BCD's largest and most well-known business travel company) is the third largest business travel services company in the world in sales volume, following only American Express and Carlson Wagonlit (another family company). Despite the effects of September 11 and the resulting economic downturn, BCD insists it is back on track, made a record result of US$58 million in 2002 and is confident in achieving its normal 15% yearly growth. Says van Vlissingen, "We know the economy is not good and the travel industry is not easy, but we think that in 2003 we'll jump back to our growth" –  aiming for $4.75 billion.

Learning from the past
Van Vlissingen admits that BCD really started as an accident, as these things so often do. However, he had an advantage over others: he wasn't going into the business blindfolded. Quite the contrary. His upbringing in a strong and long-lasting family business culture seemed to rub off on him more than he possibly imagined. (He is a member of one of the Netherlands' oldest family businesses, SHV. It is a conglomerate, originally in the coal sector, founded by six families in 1892. Van Vlissingen never worked in the company, but has sat on their board for 25 years.)"I have the experience with SHV and have learned from experiences they've been through already," says van Vlissingen. "I've also learned a lot from my father who was very keen on structure. I read about family business and find it fascinating. I love family companies and hate to see, for some stupid reason, something terrible happen to them. It's such an emotional issue and many family businesses get caught up in it – they don't like the shoes of the son-in-law or whatever – and they ruin their own capital and their own family company. That's so sad. It doesn't mean that my family always agrees. Occasionally I disagree with my son and daughters and they disagree with me and each other."

One family, one company
Speaking with van Vlissingen and reading their corporate materials, there's no doubt that BCD is a family company. Van Vlissingen is passionate about the subject and has worked hard to make the company a successful family business and to keep it in the family. The shares of BCD are owned by his three children (33% each); he owns the remaining 1%. All the voting rights have been put into a foundation, Dogwood (named after the state flower of Georgia), and up until now, van Vlissingen has been the only member of that foundation. But he explains that the situation will soon change: "A year from now all my children will become members of the foundation with me, along with two outsiders – which is different from the board of BCD where the non-family outnumber the family. Those two outsiders can play a very important role especially if the family is split, but really they're there to keep everyone together.

"If you have a certain structure in place, you are forced to come to a solution," continues van Vlissingen. "With Dogwood in place, you are automatically forced to come to a solution. There will always be outsiders there with high business acumen and experience who will help you along. It's not foolproof – somewhere and sometime something will explode, but if it does it will go through the right channels. One person cannot take a decision – a decision will be taken in Dogwood or by the board."

There's also a structure in place to ensure that the company stays in the family. "The children cannot sell their shares to a third party, but they could sell them to each other. It's never happened, and I hope it won't, but it can. I think you must realise that if you go to the third generation – I have eight grandchildren, so it would be eight shareholders – then we may need to set up a mechanism to buy and sell those shares, but I will leave that to my successors." This may sound optimistic, but if his successors are anything like him, they may look to their ancestors for guidance on the matter. With over 1,200 family shareholders, SHV has to have a formal structure in place just to keep track of who owns what. (A bank keeps track of all the shares and shareholders, and if someone wants to sell their shares, the bank sends a brochure to all the shareholders with the information; nearly every month there is a quotation from the bank involving some buying and selling.)

"Emotions do exist and we can stumble, but hopefully we've built the structure so it won't be a problem. It's the experience of coming from a family with a family business that's been around for many, many generations."

From plan to practice
And with all this experience behind him, it must certainly make the decision to leave BCD a bit easier. There's no doubt, however, that deciding to step down as CEO, from any company, is huge. It can be quite traumatic, especially if you've been at the helm for the entire existence of the company as van Vlissingen has. In family companies, the decision can sometimes be easier because the successor is another family member and understands what the founder put into building the company. But what about when a successor is not available? How do you deal with bringing in an outsider, as BCD had to do? In van Vlissingen's case, as he explains, you deal with it very methodically. "The decision to bring in someone – for me to step down – was extensively discussed at the board meetings for a year before we took action. It was really a conscious process – because I didn't want to stay where I am too long; that's always a risk in a family business. I also want to leave when the situation is strong and good – and this decision was made before September 11. We had a discussion about whether I wanted to stay another two years, what would be possible, etc. But the difficulty then is that if you don't find your successor, you never leave. All these things have been discussed with the board. A few discussions were confidential with just the family, but we've clearly had a very systematic, long approach to this and I'm very happy with who has been chosen."

Would van Vlissingen prefer a family member to succeed him? Of course. But his approach is very pragmatic and reveals the depth of his family business acumen. "I would prefer a family member to succeed me if he wants it 100% – I'm not going to force it – and he must have the experience to do it, for two reasons: for the employees and organisation; and also for the person himself, because nothing is more terrible than to start and then not be able to do the job. So, yes, I would love to have my successor to be from the family, but I am very happy the way it is now because it still could mean that my son will join later on. He's still young (35)."

So, what exactly was the approach taken by BCD? First, a narrowing down by the board of 12 potential candidates to a final group of three. Then, the three candidates were asked to meet with van Vlissingen's three children and wife, as well as the board members. It was a long process, but van Vlissingen feels it worked well. "The candidates were all so excited and they really took this process seriously. We made the decision in September 2001, after September 11. We came together at a board meeting on a Saturday at my home in Holland, and my family and the board members looked at me and said 'Well, which one?' And I told them that I was not going to decide – it's the next generation's decision. The chairman of the board agreed and the decision was left to my children and wife. But, before they made a decision they asked me if all three candidates were acceptable. If I had said 'no', the decision would have been back on me. But I said that all three were acceptable – not because I didn't want to make a decision, but because all three really were acceptable. So they finally chose Joop Drechsel – because of his global experience, his US experience and his experience in running sizeable companies. And I think September 11 showed us that you need someone who is calm, who has experience, and not someone who is shooting from the hip – that would have been too risky."

But the process didn't end there. Now came the hard part – creating a smooth transition for the new leader. But again, BCD was one step ahead: "We've made the transition in steps," explains van Vlissingen. "Drechsel came in on 1 January 2002, and we asked him to make a three year plan that he's responsible for. That's been ideal because he's been able to get to know all the different CEOs in the different companies and have serious discussions with them about the future of BCD. Drecshel was in charge of that. I did virtually nothing with the three year plan – I think I had just three discussions with him about it. When that was ready in the summer, he had already been with the company for six months. I then suggested that we do the following: by 1 October 2002, Drechsel would become the COO and really run the company. No one would report to me anymore; all staff would report to Drechsel. We also formed a management team and they became used to him and the structure. The organisation is already used to reporting to Drechsel. So, by 20 May, when I officially step down, there will be less of a change than eight months earlier (1 October 2002)."

But what happens if Drechsel steps down – tomorrow or ten years from now? Is there a process in place for a family member possibly taking over? "My son would only step in to do the job if he can," says van Vlissingen. "We have to be careful that he is ready and can do the job. I think that maybe he would first join the management team for one, two or three years and not jump straight into Drechsel's job. Drechsel has close contact with me and frequent discussions, and feels that I should stay involved, but not to the extent that there are two of us running the business. I have explained to the staff that I don't believe in two captains on the ship." And that goes for van Vlissingen's role as well as any future role his son may have. "In May, Drechsel is captain. Not me. Not my son. And in the first year of Drechsel's job, it's not even an issue. Maybe after five or so years, depending on what my son does, it will come up. There is no formal plan, but there doesn't need to be."

That seems to work now, as things are running smoothly. But what if Drechsel leaves and van Vlissingen's son doesn't want to join the family firm (following in his father's footsteps, he presently runs his own portfolio management firm)? Still not a problem, explains van Vlissingen. "We would use the same process to bring in an outsider as we did with Drechsel." Van Vlissingen is confident it will work again, and not just because it was successful with Drechsel. "We have had this experience in SHV. SHV is now run by an outsider. About 30-40 years ago it was the same. There is always a gap between the father and the son – that often happens. I don't get too nervous about it, as long as there is a mechanism so that the family is still in control of all the major issues. I think in the end, if no family member is working in the family company, things can move too far away. But it's not a problem if for 10 or 20 years no one from the family is working in the business. Our family has gone through that without any problems."

On course
May 20th brings big changes for BCD and van Vlissingen. Is he at all worried about the company or his new role as "retiree"? Of course not – he has a plan. "When I leave in May, I want BCD to be run as a professional company, with a strong family touch. That's very important. But because it's a family company there are still a lot of private matters involved. We have a separate office for the family and a separate family company for the family investments that I run with a staff of five people – it's separate from BCD. It will keep me off the streets when I step down from BCD. It also makes it easier for me to step down. I'm 63 – I'm not stopping because I feel I have to or I'm too old or can't do it anymore, but because I know that could suddenly change. Better too early than too late." He's definitely on course for a smooth landing.