Steve Don is CEO and President of Edward Don and Company, the world's leading food service distributor of equipment and supplies. The Don family has been a long-time member of the Loyola University Chicago Family Business Center, the US chapter of the FBN.
The road to succession can be fraught with obstacles but few are insurmountable. Success is a journey not a destination
I have to admit that I feel a little guilty writing about our company's success at succession. After all, we had no option but to succeed at succession. Since I was technically the only candidate for the successor of my family's business (my sister was not interested in the business and my brother was too young), if we didn't transfer leadership successfully, we failed. And as all employees of Edward Don and Company are aware there is never room for failure. However, I truly believe that our "failure is not an option" mentality made the transfer from my father Bob's leadership to my own a successful one. As with most successful transitions in family businesses, our success did not come without challenges along the way; but along with those challenges came a wealth of learning experiences that may be helpful to others who currently stand in the shoes that I once did ten years ago.
One of the first challenges that I encountered upon entering the family business was lack of credibility with the employees at Edward Don and Company. I quickly learned that in a family business it can be a burden, as opposed to a benefit, to have your name on the door. Despite my strong educational and work background, people assumed I obtained my job because I was the "son of the boss". I imagine that many of the employees felt betrayed that I had just entered the company and someday could be their boss.
Additionally, even though my capabilities matched my position in the company, I discovered that my Salomon Brothers and Kellogg background was never going to add up to the sweat equity that these employees had invested over the years. So instead of relying on my name or my capabilities, I began to concentrate on trust. Figuring out how to gain employees' trust, as well as learning how to trust others, became a valuable process over time.
The other significant challenge of the succession process was the difference in leadership styles between my father and myself. Although my father was a great visionary and a fine leader, I was much more passionate about the day-to-day business activities. As with most great leaders, he was able to align individuals to carry out his vision; however, he did not always share as much information with his employees, such as succession planning, as he did with the family. Because I had conflicts with many of these individuals, I was often faced with an ultimatum: get along with them or get off the team. Over time, these conflicts caused me to become a disgruntled shareholder, employee and family member. Particularly because my father was the one who encouraged me to work in the family business, the pressure to be 'the one' was what caused me, justified or not, to hold him accountable for my future. I felt the need to remind him that I gave up a lucrative job with an investment bank for a sales job at Edward Don and Company.
Rising to the challenge
It took challenges such as these before I realised the benefits of learning more about the family issues in the family business, as well as what I needed in order to lead a family-owned firm. So, in the autumn of 1999, enrolment in Next Generation Leadership Institute (NGLI) at Loyola University Chicago became a condition of my continued employment at Edward Don and Company. This leadership programme was popular amongst many of my family members because it is one of the few programmes of its kind that addresses the development of leadership capabilities while attending to a family business successor's specific needs.
Now looking back on my time at NGLI, I can say that there were five things that I learned about the succession process that made my transition in leadership a success.
The first was communication. Communication is one of the most important components to successful transitions. This is not to say that communication was something our family practiced consistently. Email, after all, is not the best form of communication when it comes to resolving family or business conflicts. But one of the best ways our family communicated was through family meetings. Families seem to avoid the confrontation associated with family meetings because of the risks associated in filling the agenda with emotion-laden familial issues. Although the first few meetings can admittedly be rocky, regular scheduled communication is important to maintaining consistent views across the family that will perpetuate the business over time. Communication guidelines and ground rules, such as when to give feedback, can also help and are important tools to making these family meetings successful.
The power of peers
I also learnt about peer groups. Through Loyola's NGLI, I was able to reflect on my experiences as a leader and family member in small peer groups, where we explored a myriad of family business subjects of mutual interest. Having others to talk to who can share the same experiences is very important – after all, it can be lonely at the top.
The third was mentors. Sometimes it can be hard to find someone within your own family company to mentor you. While, in theory, obtaining a formal mentor is most beneficial, one can be extremely difficult to find. Fortunately, I had the opportunity to be mentored informally by several individuals in the industry who I still maintain contact with on a regular basis.
Then there was the '360 degree feedback' survey. This is probably one of the only ways to obtain honest feedback about yourself, your skills, and your leadership abilities from non-family members. The fifth thing I learnt about the succession process was support from a partner or spouse and family. Having the support of your loved ones is of utmost importance. It's not easy being a successor. There will be many tough days.
The challenges that our family business had in transferring leadership to the next generation surrounded trust, leadership, and family – not issues I could have learned to solve in business school. For me, the Next Generation Leadership Institute at Loyola really helped our family get through this process. Investing in a programme, such as NGLI, is bound to produce lucrative returns. After all, you wouldn't hesitate spending US$50,000-100,000 on new equipment or new machinery. So why wouldn't you devote considerably less money to succession planning and to intellectual capital?
If I were to sum up the keys to succession in one sentence I would re-phrase an oft-quoted phase on success: "Success is a journey not a destination." However, when it comes down to the succession of leadership in a family business, I would state: Succession is a destination; it's the journey that is difficult and full of obstacles, which can be overcome with a little bit of planning and a whole lot of communication.