Don't Drive Away Your Best Workers

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Losing one's job can be a catastrophic event, particularly for a long-time valued member of an organization. If downsizing and reorganization are necessary, associates should be given ample notice and assistance to acquire alternative positiops or referrals to reduce stress and financial impact on their families.

Workers should be encouraged and motivated to stay on the job for the "long term." Leaders should ask associates and team members what would keep them at this job for the next 20 years, and when possible, should do their best to implement their requests.

Reward people who continuously and consistently contribute to the effectiveness and profit of the organization. Interestingly, this might be as simple as a more parentfriendly schedule to buffer the stresses of childcare. Many organizations realize the value of flextime and telecommuting as a more important benefit than a raise in salary.

Your reputation within the community and within the industry at large should be held to the highest standards. Customer relationships are never "closed deals" but instead are "clients for life." Your advertising and marketing should reflect this commitment, starting with each newly hired associate. Think about why customers do business with a particular organization. It is most likely because of the individual associate who gave them VIP treatment.

The number one reason why people leave organizations is because they do not feel valued. Although process initiatives are critically important in streamlining and improving the flow of work across an organization and its stakeholders, task-driven leaders often neglect the motivational best practices or lack the essential interpersonal skill sets that make people want to perform and produce at high levels'

Organizations that embrace training initiatives and reward education for each of its members will go a long way towards buffering the challenges and dynamics of our global environment. When people feel empowered and supported in reaching their goals and objectives, they are far more likely to stick around when the going gets tough.

Companies that truly wish to improve their organizational culture need to take care of their people and support the critical 'bottom rungs' of the ladder. This is in sharp contrast to many corporations where the line staff eams $9 per hour and the executives earn millions per year. Change must start at the top. When buy-in occurs at the top of the organizational chart, this win-win mindset will have a strong likelihood of becoming part of the organization's daily life. This in turn will have a myriad of benefits for clients, customers and the community.

- A professor for the University of Phoenix, Dr. Andrew Edelman has over 20 years of experience in conflict management, crisis prevention, and criminal iustice. For more information on his speaking and consulting,, visit www.drandyedelman.com.

THE SINGLE most common comI ment we hear from next-generation family leaders while their parent retains managerial control is this: "The boss won't listen to me: won't let me implement my ideas; won't invest in the things we need to be successful in the future." These heirs apparent often perceive this behavior very personally, often as a lack of respect, confidence, trust or even love.

We got a clue as to what was really going on when we saw a father and son arguing about an investment advocated by the son and resisted by the father. "Dad, you understood risk when you were my agel You made this kind of investment! The business wouldn't be what it is today without your willingness to make these kinds of decisions ! "

"Right!" his father said. "I took risks when I was your age. But I did it with my money. And now you want to do it with my money!"

Especially with business founders who both identify strongly with the businesses they created and have the majority of their wealth tied up in the business, generational progress can be stopped in its tracks by issues related to personal financial freedom and security. Worse, the ensuing friction can be interpreted in ways that magnify the destructiveness of the conflicts.

Moreover, lack of personal financial freedom often leads to personal decisions-like refusing to transfer managerial control or stock ownership to the next generation even when it is clearly best to do so-that compromise the business and the family.

One of our favorite cartoons has a middle-aged man pointing ro factories through the window and saying to his adult son, "Someday this will all be yours-but right now I'm still waiting for my father to give it to me!"

We hear a similar message in different ways in other family business circumstances. "Don't you dare risk my inheritance," says an outside family stockholder to his cousin, a rhirdgeneration c.e.o. "l sure wish rve'd bought back my cousin's stock sooner so rve wouldn't be forced to go public." laments another.

Still another successor ponders: "lf I felt more financially secure, I wouldn't worry about whether or not I'm selling my soul."

All these expressions make the same point: If key orvners don't feel they have personal financial freedom. family friction and business compromise are inevitable.

We find that rvhen a family member feels dependent on the family business for his or her financial security, resolving that perception becomes a critical priority. Similarly, the more free and independent owners feel, the more likely they rvill be committed to family business continuity. Shareholders with similar feelings are more likely to be supportive and content.

The first time financial freedom becomes a priority for a family busi-

By John L. and Craig E. Ward, Ph.D. Arnoft Ph.D.

ness is when the founding generation approaches retirement age. It's hard enough for founders to "let go" of the business they birthed. but it's even harder if they feel their exit makes them dependent on their kids for their security and standard of living. We find only rare instances in rvhich parents will fully turn over control of the business to a successor unless they feel penonally financially secure.

To satisfy this need. most think first of life insurance. Unfortunately, the real concern is financial support during the rest of what rvill hopefully be a long life. Therefore. a key step in successful succession planning is to fund the parents' financial security. There are several possible approaches: Fund an annuity over a long period of time.

. Actually purchase some of the parents' stock even if they are willing to leave it in their rvills.

. Bonus the parents aggressively until their "nest egg" is financed.

In each case, it's essential for the parents to specify the level of liquid assets and income that would allow them to comfortably and willingly depart from the business. While these approaches may seem troublesome, redundant, or expensive, they greatly lessen the normal pains of succession transition.

Just as it is unhealthy for the senior generation to "live off'the business. successors rvho could not leave the business rvithout destroying their lifestyles also create an unhealthy situation. Successors in this situation often feel they are "selling their souls" and have little dignity. On the other hand, we find that if successors have some personal financial independence, they are more forceful and effective leaders of the business.

While young successors can't maintain their sense of independence through rvealth, they can achieve it by accumulating some savings, adopting a standard of living more modest than their income, and, most imPortant, bY honing their personal competence to the highest degree. We find that family members who are too dependent on the family's income to fund their lifestyles are not the best employees. Ironically, those who can say, "I can do just as well on my own," have the greatest sense of adding value and taking responsibility. They make the best family business leaders.

At least one-fourth of all family businesses reach the stage when many family members own stock even though they don't work for the company itself. Outside family stockholders often look to dividends or perks from the business to finance their personal needs. They often come to think that they have a right to help run the business as well.

Nothing is more embarrassing and disruptive to a family business than a family member who feels no power in day-to-day business operations and who feels "stuck" in their stock ownership position. Before this situation develops, we urge family businesses to develop a plan and a formula for stock redemption. When the formula is established early in the business' life, it can be biased to preserving the business. Since most stock passed on is a "gift" from previous generations. it is a good idea to establish a stock redemption formula while the stock is still viewed as a gift, the price of which should not be argued over.

One approach we like is to set aside an annual pool of funds (as a percentage ofprofits) to use to repurchase any shares of stock offered. We find that family shareholders are more likely to remain as satisfied owners if they believe they have an "out" or at least a "partial out."

When family business founders, successors, or inactive owners feel dependent or trapped, the greatest potential for difficulties occurs. Financial freedom is really just a perception, but the sooner it's addressed, the less expensive it is to respond to. And the good news is that the more financially secure and free family members feel. the more committed the family and the more successful the business are likely to be.

-John L. Ward and Craig E. Aronoff are co-founders and principals with The Family Business Consulting Group, Inc., Marietta, Ga.; (800) 551-0633. Dr. Ward can be contacted at ward@efamilybusi-