7 secrets of success

f-\ HnNce, cHANcE. cHANGE. We hear \-zabout globalization. speed. technology, virtual workforces, labor market, outsourcing, belt-tightening, etc. These and other forces may change the daily challenges of work, but the basic principles of leading a family business effectively remain unchanged.

Although everyone likes to talk about leadership (and it is clearly very important), it is not the antidote to all problems. The message of leadership is repackaged, over and over again, with a new twist or a new voice beckoning us to follow.

Compare the marketing of leadership to the principle of weight lossconsume fewer calories than you burn,

This principle is very simple at its core, but as it is packaged and marketed, its complexity can become dizzying.

The problem with many of today's family business executives is not a lack of knowledge or inspirational leadership, but rather a lack of application of knowledge. In other words, there is frequently a knowing/doing gap.

Leading a family business has, in many ways, not changed over the years. and spending time trying to invent new leadership techniques is probably not a good use of time. Assuming that you have a solid understanding of your business and industry, your time and energy is well spent on specific actions and implementation. Consider these well-known "secrets":

| , Focus. Identify your market, your competitive advantage, and your firm's expertise, then stick to it. Staying on course with what you do best is often an operational challenge for entrepreneurs. Maintain your focus by automating, streamlining, or outsourcing functions that are not core to your business.

A recent study found that the most profitable companies sold fewer products and had fewer customers and suppliers. Their conclusion, "complexity leads to overhead that results in increased expenses." Adding complexity generally leads to increased sales with eroding net margins, while focused operations are usually more profitable. Identify the most profitable services, plants, products, salespeople, or regions in your business.

2. Plan for Success. Planning is one of the most well-founded principles of personal and business effectiveness. Although the time horizon is shorter in today's fast economy, planning at all levels within your company (as well as among the shareholder group) will significantly improve the likelihood of hitting targets. Effective planning should trickle down through the business. Each level of planning inside the business should provide the context for the next level and result in a better organizational alignment.

A solid strategic plan is important, but remember, "The devil is in the details!" Companies that are diligent about translating strategies into specific, individual performance objectives tend to operate more effectively and efficiently.

3. Communicate. Communication sounds intuitive enough, but many families in business simply miss the mark. In spite of numerous efforts by management, lack of communication is predictably the number one complaint resulting from employee opinion surveys. A closer look at the data states that employees really wanVneed answers to four questions:

. Where is the business going? (Strategy)

. What are we (Plans)

What can I (Roles)

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4N doing to get there? do to contribute?

What's in it for me? (Rewards)

Ensure that these questions are answered before communicating about other topics. Leaders from today's most successful companies argue that, "Leadership is Communication." Therefore, to be an effective leader, ensure that communication is a top priority and is honest, consistent, and two-way.

4. Define Processes. Underdeveloped infrastructure (systems, processes, structures) is one of the most common risk factors for family businesses.

Are your processes and systems?

. Clear Replicable

. Documented

. Supported by tools

Easily accessible

Although it is always easy to say, "We need a new system," it is better to streamline the manual systems before changing technical systems. Many companies who reverse this order simply end up automating inefficiencies.

As an acid test for how well the processes are defined, documented and consistently used by employees, ask, "How easily could we franchise our business?" Effective processes enable management to work "on" the business rather than "in" the business.

5, Design your Culture. Culture can be very complex. Pared down, however, it is all about behavior. Simply put, you want to design systems to reinforce behaviors that sup-

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Rules and policies

. Goals and measures

Staffing and selection

Training and development

Ceremonies and events

Leadership behavior

Communications

Rewards and recognition

Physical environment

. Organizational structure

One family management team was experiencing tremendous growth and was concerned that they might lose the autonomous culture of the company.

Unfortunately, the incredibly detailed policies they implemented gave the opposite message to most employees. Another company recognized that in order to grow the business they needed to give senior managers more accountability. The c.e.o's leadership behavior (micromanaging), communication patterns (informal and haphazard), and employee development (minimal) continued. As a result, the management team (family and non-family) never jelled. Needless to say, this company's growth was very turbulent and slow. This latter example is not unusual to see in an entrepreneurial family business.

6. Select and Train. You can receive the greatest return on investment by simply managing your human capital resources. Selection and training are the two best levers for improving human capital.

. Resist the "warm body" syndrome. Hire a good fit for the company and do not compromise. Employee selection is often the least effectively executed management activity.

. Train continuously using a broad definition of training (mentoring, developmental assignments, special projects, building external networks, providing well-rounded feedback).

. Ensure that all employees understand the business: the cost/revenue driver and how they can contribute to the financial success.

7, Measure Performance. Measurement and feedback, like planning, are well-founded principles of human behavior. You can do everything correctly, but if you do not measure performance, you limit the company's ability to adjust. When measuring results, keep these tips in mind: Measure what matters. Keep it simple.

Focus on a few key success factors.

. Remember, what gets measured, gets done.

Manage what you measure. Use your performance management system as a strategic tool, not a human resources program.

Err on measuring more frequently and less in depth.

Reward along the way and in little steps. Waiting until the end of a major project is often too great a distance from start to finish. Remember, "What you can measure, you can reward."

Revenue, earnings, margins and management are fundamental to a firm's value. Intellectual property, brand image, and "eye balls" add value but, independent from the fundamentals, are usually not enough to support a lasting, high value of any firm. Turning these "secrets" into actions will help create sustainable advantages in your family business.

- James Olan Hutcheson is managing partner and founder of ReGeneration Partners, a family business consulting firm headquartered in Dallas, Tx. He can be reached at (800) 406-l I l2 or www.re ge ne ration- p artner s.c om, Reprinted with permission of ReGeneration Partners. No portion of this article may be reproduced without its permission.

J.E. Higgins Closes Door on Golden State Flooring

J.E. Higgins Lumber, Livermore, Ca., has shuttered its Golden State Flooring division.

Formed in the early 1900s and acquired by J.E. Higgins in 1929,the chain had operated 14 locations in California. Its three branches in Southern California closed in late May and early June, with the Northern California facilities shuttins down soon after.

Ramsey P. Fendall, 86, longtime Pacific Northwest lumberman, died May 14.

A World War II Air Force sergeant and POW in Germany, he began his 5O+-year industry career in the late 1940s after graduating from the University of Oregon. He worked as sales manager for Cape Arago Lumber, Coos Bay, Or.; Georgia Pacific in Alaska; Hampton Lumber, Portland, Or.; RSG Forest Products, Kalama, Wa., and Dixieline Lumber, San Diego, Ca., before helping launch Dixieline's cargo facility in Columbia City, Or.

Herbert ttHerb" Leon Church, 91 , longtime foreman for Winton Lumber, Martell, Ca., died June 12.

He started in the lumber business at age 12 and served in the U.S. Army during World War II and the Korean War. He joined Winton after moving to Amador County, Ca., in 1959, and retired in 1983.

Dale Sharp, 68, salesman for Building Solutions, Bend, Or., died May 20 in an accident at his home in Culver, Or.

He joined the lumber industry after serving four years in the U.S. Army as a mechanic in Korea.

Donald "Keith" Farquhar Jr., 61, founder and owner of Easy Creek Lumber Co., Eugene, Or., died May 24 ofheart failure.

He launched Easy Creek in 1979.

Harold P. "Hal" Jewett, 88,longtime Oregon lumberman, died May 23.

After earning a forestry degree from Oregon State University and serving in the U.S. Navy during World War II, he spent 35 years with Georgia-Pacific and Booth-Kelly Lumber Co., Springfield, Or.

Richard James Nowak, 65, retired Oregon mill supervisor, died June 17.

He worked as a mill supervisor for Brooks-Scanlon Lumber, Bend, Or., from 1966 to 1976, before serving as maintenance superintendent at Whittier Moulding, Redmond, Or.

Ronald Lloyd Fosdick, 75, longtime contractor salesman at ProBuild, Shelton, Wa., died April 20.

After working for Simpson Timber and operating his own flooring business, Omni Floor Covering, he joined Lumbermens in 1981, which later became ProBuild. He retired in 2009.

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