Do You Have a Business — Or A Perpetuity Project? Protect Your Greatest Asset with Clear Thinking and Solid Planning

By Lauren Owen, Redpoint Succession and Leadership Coaching

I just finished reading Tom Deans’ book, Every Family’s Business. I’ve already given away my two copies of this book to clients and will likely give away more because of the excellent points Deans makes.

According to Deans, the most important thing that a founder can do is to think of the business as a money making asset, not as a legacy for the family. The true legacy is the wealth the family business creates, not the business itself. Part of this responsibility, he states, is in always asking the question: in whose hands would this asset create the most return? If the answer is “in someone else’s”, then that option must be explored.

Too many founders think in terms of what Deans calls a “perpetuity project” with the goal of keeping the business in family hands trumping the goal of the business as a money making asset.

When the goal is to keep ownership of the business in succeeding generations no matter what, the costs, Deans says, can be devastating. Next generations members can get stuck in declining businesses they either did not want and/or are unsuited to lead. Businesses can fail due to ownership that turned a blind eye to market realities or unqualified management. Ultimately, family relationships can be damaged or destroyed as a result. The wealth that the family was counting on to continue on to future generations (or, more importantly, pay for their own retirement) is gone forever.

One of the biggest mistakes, Deans says, is gifting ownership to children or key employees as a form of compensation. Bad idea! Ownership transfer should be treated separately, again after asking the question, “In whose hands would this asset create the most return?” Don’t mix stock ownership with employment compensation. Children (or key employees) should be fairly compensated for the work they do in salary, not stock. Another reason for gifting is to avoid taxes. A bad decision made for tax purposes…is still a bad decision.

Deans lays out a series of 12 questions that every owner needs to ask of themselves and then ask of their children and/or key employees at least once a year.

Here are Dean’s first four questions to get you started:

1. What does your business look like in five years? (to both owners and child/key employee)
2. Are you interested in selling your stock? If yes, to whom? (to owner and child/key employee if they own stock) _____Yes _______No If yes, To Whom __________
3. Are you interested in buying stock and acquiring control? (to child/key employee)
4. Do you understand and agree that in the interest of maximizing shareholder value, this business can be sold to a third party at any time? (to owner and child/key employee) ____Yes ______No

If you are like most of the business owners we see in our practice, your business is likely the single most important asset you own. And, if you are in the 80% of business owners out there who do not have a succession plan in place, for the sake of your family and your future, make it your business to explore the issues raised in Deans’ book. For more information on Deans and/or to order his book, visit his website.

How To Lead Generation Y: Delivering The Leadership That Will Make Them Thrive Is Easier Than You Think

by Urs Koenig, PhD, MBA

Personal note: In my previous position as marketing director at Merriman, a financial advising firm, I had both the two oldest (60+) and the youngest member (23) of the entire firm on my team. My team spanned almost all four of the previous generations (Traditionalists, born between 1926-1938), Baby Boomers (1945-1960), Generation X (1961-1981), and Generation Y (1985-1995). Including an intern, I had four Generation Y members working for me. One of the things I enjoyed most about my job was to facilitate and lead intergenerational team-work. If you are leading young adults (or are in charge of people who lead them) I believe you will find the lessons I have learned about leading members of Generation Y helpful.

Shannon is 25 years old. She is in her second job out of college. She was hired as a ‘high potential’ candidate by her current company. She survived several rounds of layoffs and is very unhappy in her current position. Her old-school, corporate, generation-X boss micromanages her time while not providing much feedback or guidance on her actual job. Shannon is disillusioned with management and cynical about her job. She puts in the absolute minimum in time and effort and spends a lot of her working time surfing the web. The poor job market is the only thing stopping her from leaving the company.

Bruce is 19 years old and in his second year of college. He is the third generation in a family business. His grandfather (70) only recently handed over day-to-day operations to his father (45). This summer Bruce is interning as the ‘social media guru,’ his first paying job in the family business. After a few weeks, he is highly frustrated. In his view, people at the company simply ‘don’t get it.’ He truly desires to make an impact and help make a difference but feels that no one is listening to his ideas or values his input. In the interest of family peace, he decides to continue with the internship but secretly vows to never again work in this family business.

The above real-life examples demonstrates what happens when Generation Y leadership goes bad.

Today’s young adults entering the workforce are a different breed than those of any of the generations before them. They must be lead slightly differently as they enter the workforce:

Provide constant feedback (and manage their sense of entitlement)
These young adults are used to and crave instant and constant feedback. Most of them grew up with lots of praise. Many Trophy Kids received ribbons and trophies simply for showing up at Saturday games. Their parents have told them over and over again they can achieve anything they want. They are highly optimistic and sometimes out of touch with reality. They are definitely not used to being told that the quality of their work needs improvement.

As their leader, it is virtually impossible for you to over communicate. Provide them with ongoing, just-in-time feedback. Give them the praise and appreciation they crave. At the same time, hold them accountable. You might be the first one to ever tell them the truth about the quality of their work. If they are falling short, you need to tell them. As their leader and mentor, you need to help them discover their weaknesses and strengths and then play to those strengths

A word of caution though: Don’t ever micro manage their time. Instead, lead by objective. They value a flexible schedule and might do their best work from the local Starbucks or at 2 a.m. in their pajamas. Assess their performance, not their attendance!

Be a strong mentor and coach
This is probably the most important lesson of them all. Members of Generation Y are extremely responsive to mentoring and coaching. Develop strong and meaningful relationships with them by really getting to know them: Take them for coffee, go for a lunchtime walk/run, play some golf and most important, ask questions and really listen to what they have to say.

Learn their passions, their desires, their aspiration in life. In return, share your experiences and lessons you have learned. They are hungry for your insights, they love to be ‘in the know’ and they will soak up your knowledge, feedback and advice. Become their strong mentor and coach and your Gen Y’s will thrive, blossom and follow you loyally.

You might also explore a ‘reversed mentoring’ approach, something Jack Welch at GE pioneered over 20 year ago. The idea is to pair Baby boomers with members of Generation Y. The Boomers share their work experience while the Generation Y team members enlighten Boomers about new technologies and social networking.

Share why their work is important
These young people have little time for doing things because they are told to do so or because ‘that’s how we have always done it.’ They are hungry for data and information. Remember that, for better or worse, many of them are constantly multi-tasking, and are taking in thousands of technology messages every day. Faced with this overload, they quickly sort incoming information between what they deem is ‘need to know’ versus ‘nice to know’.

Provide them with lots of context and information. Communicate the importance of their work and tell them how it fits into the company’s overall big picture. Help them see that what they do really matters. Show them how their work is making your organization better, making a difference in the world and is part of something bigger – not just adding to the bottom line. Several studies, for example, have shown the importance of environmental causes for Generation Y.

In short: get them fired up for your vision, show them how their work will directly help you to make the vision a reality and your Gen Y-ers will be the best people who ever worked for you!

Give them opportunity for input and ownership
Members of Generation Y have been on their laptops since they were four. They grew up with posting and voting on Facebook and blogs. They have a strong desire to express themselves, to comment and to provide input on topics.

Be bold and have them provide you input and feedback on high-level strategic topics which you would normally not share with them. They will forever value you for giving them the opportunity to ‘upload their thoughts’ and much like any generation before them, they will throw their support behind what they helped to create.

After they have given you their input, it’s time to challenge them: Carve out a project with a clearly defined deliverable, a budget and a timeline, then give them full ownership of it. Make yourself available as a coach and mentor. But don’t micromanage them or their projects.

Be tough when assessing the results of their work by providing the honest, credible feedback they so crave.