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Greg Ast
Greg Ast is president of Legasus Group (www.LegasusGroup.com), a family business consulting firm offering services designed to enhance clients' growth, success and profitability. Legasus Group has a staff of trained professionals - specialists in management, family-owned businesses, strategic planning, profit enhancement, finance, international business and executive development that work with family-owned and privately-held businesses. You may contact Greg at (316) 681-0444 or by e-mail at gast@legasusgroup.com.
Business Consulting
2002-11-01 14:20:00
When it starts to go ‘south’
QUESTION:  I am a non-family manager working for a family-owned business and I need some advice.  We have not been doing too well for the last several months.  I'm pretty sure this business is going to fail unless the family begins taking advice from outside the family circle.  While they are all great people, I just don't feel the second generation owners have their fingers on the pulse of what's going on.  Do I wait for the inevitable, butt-in and take my chances on getting fired, or just jump ship?
ANSWER:  Unfortunately you are in a difficult position, but one that is not uncommon.  Statistics indicate that only 33% of companies will successfully transition each generation.  Lack of planning and poor successor leadership are two of the reasons a transition fails.  Therefore, I believe that to do nothing is not a good option.  Although anyone would understand why you might leave the company in this situation, I strongly encourage you to take a proactive stance and pursue one of several options:  confront the owner(s) with your evaluation of the situation; approach the board or other company advisors with your concerns and suggestions; or, recommend hiring a family business consultant.  Let's look at these options in more depth.Confront the owner/leader with a well-thought out presentation identifying your concerns and possible solutions.  This option assumes you have a strong enough relationship with the owners and/or family business leader to gain an audience and his/her attention.  As you present your ideas, I recommend you be candid and specific.  When you identify possible solutions, I encourage you to find a way for all family members to "win" - especially if you suggest they are not capable to lead.  This approach works best when owners or leaders are already concerned about their situation, but not sure how to respond or are afraid of conflict.  By identifying specific steps to take, and the expected measurable outcomes, you can hopefully convince them to take action.  As an example, you might recommend the hiring of a non-family chief operating officer (COO) to successfully execute the right changes.If you are not able to influence the owners, then request a meeting with the company's key advisors or board members and tell them of your concerns and recommendations.  Like the first option, this will require you to build a convincing argument for why change must occur for the business to succeed.  Most importantly, you are expecting that your knowledge and insight can be complemented with the advisors' objectivity and privileged confidant position.  Although you may risk being perceived as "working behind the scenes," it could be all the information they need to confront a situation they have already become concerned with.Finally, suggest the owners/leaders retain an experienced family business consultant.  Family business consultants typically work with family owners and leaders to identify critical issues that must be addressed in order to successfully continue a family business.  The consultants will review the overall financial and operational status of the company, interview key managers (family and non-family - probably including you), and provide objectivity in helping owners/leaders make difficult decisions or changes.  A good firm will be candid and direct with the owners regarding their recommendations and convey the necessary sense of urgency for dealing with issues.  They are also experienced in handling the difficult family dynamics that can be present.There's an old adage that says, "Shirt sleeves to shirt sleeves in three generations."  This notes the sad reality that many family businesses are unable to establish strong management teams and structures to ensure a business succeeds to future generations.   And although you would not be the first non-family manager to flee a sinking family business ship, you could very well become the agent of change that's needed in a dire situation.  You are in a unique position to see the situation from several angles, and I encourage you to act.  Remember that there are professionals that understand the dynamics of the family business and are trained to assist.  If you need additional information on available resources, don't hesitate to give me a call.
 
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