Every business that survives for any length of time eventually needs to find new leadership. Perhaps the challenges of the business now exceed the capabilities of the current leader. Perhaps the current leader wants to retire or has reached the company’s mandatory retirement age. Or perhaps the company leader is disabled or has passed away. Whether you’re trying to find someone to follow Steve Jobs at Apple or Don Stevens at Don’s Air Conditioning, finding an able successor is always challenging.

It is likely that not everyone on the management team and board agreed that Tim Cook should step into Jobs shoes at Apple. But at the end of the day, they went home to their families and friends. At Don’s Air Conditioning, if the leadership team that consists of three Stevens family members disagree over who should succeed their father, that disagreement and possible hurt feelings come home when the Stevens return from work. And do you think they might share their opinions and feelings with their spouses? Do you think the spouses may also have an opinion to offer?

An article in the March/April 2012 edition of Family Business Magazine describes how Wells Enterprises, the Iowa based maker of Blue Bunny ice cream (sales $1+ billion), handled succession for their third generation CEO. Through most of the company’s history, family leaders in the company collaborated as partners on decision making. But in the words of third generation member, Doug Wells, “We knew the weaknesses of inbred family management. We spent a lot of time identifying opportunities to improve and the additional professional expertise we’d need to do it.”

The Wells family and non-family management brought in consultants to run a process that resulted in a proposal to change the management structure and the makeup of the board. Mike Wells was named CEO and four other family members stepped down from senior positions at the company. Three of them still serve on the board, but are now joined by three outside directors. Historic, significant changes that I imagine tested family relationships. But listen to how Doug, who had been a co-President, viewed the situation “It wasn’t my goal to retire at 55, but sometimes you have to look at yourself in the mirror and ask what you want to do and what is the right thing to do. It was a critical time for the business. We couldn’t only think of family; we have responsibilities to our employees and our town.”

Congratulations to the Wells family! They identified the succession issue and applied time and resources to address it. They also likely worked through some difficult family and emotional issues. The result: a decision that has worked well for them, their employees and the community. The article concludes by quoting CEO Doug Wells, “We are a great example of a family business that protected the family by putting the business first. Shareholders are enjoying greater benefits because the company has accomplished great things. We made tough decisions in 2007, and we’ve been proven right.”

To celebrate their success, I think I’ll enjoy a few scoops of their Blue Bunny Chocolate Ice Cream while I play another game of Angry Birds on my iPad.

Let’s face it. To be successful in business you need to work hard and outsmart your competition.

Now add the challenge of working with a sister or brother. You may like each other. Maybe even love each other as your mother has always hoped. But that doesn’t always translate to working well together. Just like many married couples, they may love each other but they have a heck of a time hanging wallpaper together or managing the checkbook.

So how do you work better together and become an effective sibling team?

In their article entitled The Shadow Effect of the Founding Generation on the Sibling Partnership (The Family Business Advisor, May 2011), Stephanie Brun de Pontet and Kent Rhodes describe how family culture during childhood affect the way siblings work together. The authors note the following influences: competition, controlling behavior, entitlement and powerful vision.

Competition: Some parents pit their children against each other, constantly comparing the performance of one to the other. So it shouldn’t be surprising if kids in the business are “always at each other’s throat.” De Pontet and Rhodes recommend that adult children acknowledge the influence of the “competition principle” and discuss candidly the steps they need to take to develop a more collaborative relationship. It may be worthwhile to share stories of how competition impacted their sibling relationship, then move on to building empathy and understanding between the siblings independent of the parental influence.

Controlling Behavior: Within the family or family business, parents may make all the decisions, so their children never get the opportunity to work together on anything of consequence. The authors recommend sibling teams carve out special projects, such as drafting a code of conduct or creating a next generation vision for the future of the business.

Entitlement: According to the authors, if parents have raised their children with an attitude of entitlement, “all bets are off.” Imagine trying to work with someone who has an exaggerated sense of importance, who does not have a strong work ethic and who thinks things are owed to them. Advice to the adult children: take an objective look at your work ethic and willingness to make sacrifices for the good of the whole. If you are lacking in these areas and unable to change, it is unlikely you can be an effective employee or member of the ownership group. (Yikes!)

Powerful Vision: Unfortunately, the stronger the vision and personality of the business leader, the more difficult it is for the next generation to find their own voice and purpose. And any deviation from the parent’s vision may be considered blasphemy. But the authors recommend that each generation examine the business and define their own vision and purpose for the business going forward. In addition to the challenge of coming to agreement on that vision, agreeing on the pace of change will also test the siblings’ ability to work together. With open discussion, respect for different points of view and willingness to collaborate, this type of work can be an important part of creating a cohesive sibling partnership.

De Pontet and Rhodes remind us that we will likely outlive our parents by many years, and we typically meet our spouse in our 20’s, so the people with whom we really share life’s journey are our brothers and sisters. While building a strong and effective sibling team can be challenging, the effort can be very worthwhile. Their recommendation: “If you have the opportunity and responsibility to deepen your bond to your siblings….. make the effort to do it right!”

A little over 25 years ago my family began meeting to discuss matters pertaining to the ownership of our business. My father, who was running the company at the time, was concerned that family communication was creating conflict that could impact the business as well as damage family relationships. He was also concerned the next generation (in their 20′s and 30′s) needed to be prepared to be responsible owners of the business.

He was inclined to lead the meeting, but then he realized that he was in the middle of issues like family employment, executive compensation, dividends, etc. So he decided it would probably be best to have an independent third party facilitate the meeting. Wise move, because it also allowed him to share his opinions and leave it up to the facilitator to guide the family in discussing issues and resolving differences.

He hired a family business consultant (probably one of the few in the world at the time) and the first of many family meetings began. Over time this consultant and others along the way helped us by sharing “best practices” on issues like family employment, providing tips for effective family communication, and clarifying roles and responsibilities of shareholders and other key family business constituencies. They facilitated our discussion of how we could modify those “best practices” to best meet our needs. They’d listen to our various points of view, summarize the key points, add their informed perspective, and help us reach agreement on guidelines and policies.

For example, we created a family employment policy (subject to review and approval by company management) that described how family members could apply for a job, what their qualifications should be, and how they would be evaluated and compensated.The company appreciated our input on this sensitive topic.

We prepared “Guidelines for Communication” that we all agreed to follow when communicating with each other in meetings and by telephone and e-mail. We also established ground rules for communicating with management and our board of directors. The management team and board also contributed to shaping those ground rules – and they’re happy to have them in place. Why? Perhaps because of provisions like the one that discouraged individual shareholders from contacting individual managers and board members to push their personal agenda!

And we discussed the roles and responsibilities of shareholders in a family business. Being clear on our “R&R” helped us prepare the above communication guidelines. And we learned that as shareholders our primary legal responsibility, and legal authority, is simply to elect directors. Beyond that we really weren’t legally required to do much of anything, nor did we have the legal authority to do much of anything.

Hmmm. Legally, this doesn’t sound much different from a shareholder of a public company, right? But of course ownership of a family business is much different from ownership of a public company. Just to name one: as an owner of a public company, the typical IBM shareholder has no interest in ensuring that their 500 shares of stock pass successfully to their children. (Maybe some of their wealth, but not necessarily those specific shares in IBM.) And if the shareholder is disappointed with IBM’s financial performance or its approach to environmental issues, or if they think IBM executives are overpaid, that it carries too much debt or the dividend is too low, then they can simply sell their shares.

Not so easy to do, technically or emotionally, when those shares are in the company started by your grandfather 50 years ago.

Our family may be like yours – we’d like to keep ownership of the business in the family through at least the youngest (4th) generation.  With that goal in mind we’ve identified shareholder responsibilities beyond just voting for directors. “Owner Education” is one of those responsibilities, so, as described above, family meeting topics include understanding principles of good governance, learning about critical success factors for the business, and discussing financial matters important to the ownership group like estate planning.

When we gather as a family (now with three generations in attendance) we learn how to be effective owners, then take action to put key principles into practice. I guess you could say that since 1985 we have been guided by the wisdom simply stated by well-regarded family business author/consultant John Ward, “Responsible family business ownership doesn’t come naturally. It has to be learned.” But we had a head start – this quote is from the book he published in 2002!

Board “Dialogue”

I am very pleased to announce that one of my clients, AmeriPride Services, won in the “Legacy” category at the annual MN Family Business Awards held in Minneapolis on November 10.

The second, third and fourth generations are active as owners, employees or board members. My assignment was to help the fourth generation prepare for responsible ownership of the business.

With active involvement of members of “4G”, and enthusiastic support from “2G” and “3G”, we created a family council headed by a five member, multi-generation leadership team. The council will coordinate the education of family members about important family business issues, and will work to ensure good communication within the ownership group and between the company and the family. In addition, the council will be sure there is always time set aside for the family to have fun together!

Recently the leadership team was actively involved in developing a plan for bringing the first 4G member on to the AmeriPride board. The board reviewed the plan and with a few minor exceptions implemented the plan a few months ago. Both the board and the family are very pleased with the result.

Congratulations to AmeriPride and its very capable and responsible group of family owners!