Centre for Family Business Session with Steve Legler

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Conversations about Continuity

0:06
Choose Steve to use not you know succession and communication.

0:10
I think sometimes we just get tired of hearing the same old words over and over and so then they just sort of go over our head. That’s one small reason but yeah, so we you and I and Alicia were on a zoom call together discussing what how we could frame this. And and Alicia was going through some of the survey comments and you know, communication and succession came up which I guess they probably always do or certainly with with enough regularity. And the first let’s talk about the first one and talk about communication. And I said, you know, recently I’ve been hearing a lot more thinking a lot more of just objective communication, but what what is one of the major subsets of it, and it’s the conversations that we have. And so there’s there’s somehow that been this lost art of conversation maybe, and maybe the fact that we aren’t together as much forces us into figuring out new small habits that we can do whether it’s over zoom but it’s the small communicate. That’s the small conversations that they did they the heart to heart, that are often the grease that helps all the other communication take place. And so I think it’s too easy to just say we’ve got to work on our communication and then have different people have a vision of Okay, so we need to start a newsletter, or we need to start a new platform for the family to get together. It’s often that’s that’s some of the big stuff. And if we go to what Rick was talking about that book, it’s the small stuff. So my invitation for people here and in all business families, is to sort of revisit and prioritize a lot more of the regular conversations, the smaller conversations, whether they be one on one or a sibling group, or just the parents talking about the kids to just have more small regular conversations. There’s something I saw recently about the 101 minute conversations. I don’t know where I got that from, but I love that because it’s sort of like if you want to have a talk with your kids about like the future of the business, like you could set aside 100 minutes and have a big long meeting and get probably a lot done. But if you had 101 minute conversations, let’s say twice a day over the next 50 days, you could probably get a hell of a lot more done, because everyone has a chance to sort of reflect and think and see how things land with them and then come back and keep and have more progress. Whereas if you try and do too much in one session, it often you don’t get the chance to digest everything. Now the other part, the part about succession. So Alicia was saying now a lot of people want to talk about succession. And I know that in groups like this, where there are members of different generations that are part of the family that are in in the business and part of this group. And I hear you have different roundtable groups with the younger people and the older people. And I’m sure that there are different viewpoints to the whole question of succession, depending on on what group we’re talking about. And so the vocabulary that we use sometimes for to address a certain subject not only does the word succession, kind of get old and mom and dad are tired of hearing of it. But I think there’s a better word, and that word is continuity. So people talk about succession planning, which sort of conjures up the idea of what are things going to be like, afterward after I’ve passed the baton? Whereas continuity somehow lends itself more to thinking about what things are going to be the same. And so I think if you start the conversations, talking about the things that you want to be the same that you want to continue the same way. It’s a lot easier for people to get on the same page and start to make progress in those short conversations than if they start to talk about succession, which immediately makes people think about, oh, my God, what’s it going to be like when I’m not here? They’re trying to push me out. Whereas continuity is more about let’s look back and see how we’ve done well and how we continue can continue doing the things we’ve always done, as different people have taken different leadership roles.

4:33
Perfect. So you’ve heard we’ve talked about it the TV program succession. So we should ask them to change it, you know, let’s be the change and ask them to change it to continuity.

4:47
Well, actually, you know, what, if people have watched that show, that’s actually the perfect they’re like the poster child for not wanting to talk about succession the way they’re doing it has, let’s just say a few shortcomings. I would hope that the families that are members of CFB will not be experiencing because they’re a little bit out there, but for dramatic purpose.

5:11
Now, we had some input, and rightly so I mean, I think we all agree with this that really kind of fatigued from pandemic related subjects. But you said you didn’t want to close the door on that you wanted to bring it back. So why

5:28
I think we can ignore the fact that as you started our discussion here that when when I was with you people in September, the world looked a lot different. And yes, I agree that here’s another webinar on how to adjust to being on lockdown. People are tired of those things. And you cannot ignore the fact that things are different. And so I don’t want to seem tone deaf and start talking about a tour talking as if everything is back to business as usual. Because we’re in we’re in kind of a a new abnormal as some people have called it. We are looking at new realities and how we have to communicate. And so like I said a few minutes ago, some of the things that had been on the back burner are now hopefully moving to the front burner or there is an occasion to move them to the front burner, because every family business over the last few months has had to adapt to new realities. I’m sure that there are some businesses that were affected very negatively and others were positive. And I’m also sure that there were some were people who had maybe a smaller role in the past stepped up to an opportunity to help the business pivot. And I think that they’re they’re probably cases where they were rising generation family members who took on new roles and displayed probably some leadership qualities that maybe were not expected or or that they really you know, leaped up. And then I’m, I’m hoping that there were some leading generation or parents or now generation leaders that have seen some of these things. And maybe you know, there’s an expression never let a good crisis go to waste. I’m sure that there are some people for whom the things we’ve experienced over these last few months have actually given them a whole new perspective on their family members, and the abilities of those family members. And that’s now I’m talking about people on the way up who want to take on greater roles within the business but I also wonder if there aren’t some on the other end of that, who were maybe planning to work for another few years and then retire, and then maybe realize that you know what, this this might be an occasion for me to step aside a little earlier and handover and if those things happen in the same family where somebody stepped up and somebody realized they’re stepping up, and now somebody can sort of, you know, give that younger person more room, so much the better. So I just didn’t want to act like nothing has changed. And I’m sure that the situation I just described isn’t necessarily universal, and it’s it’s probably hopeful on my part. To think that it happened a lot more places. And maybe it didn’t happen to the degree that I’m suggesting it might have been even in incremental ways. The younger generation like so many of the pivots that I’ve been hearing about businesses doing are often have to do with the technology and then the online component. And, you know, it doesn’t take a rocket science to no rocket scientist to know that the younger people are more comfortable and probably took more of a leading role in some of those things. And so the older generation that has seen their kids help them make these pivots and take on increasingly important roles in it. I would think and hope that this can sort of drive the conversation and move some of the, you know, how are we going to transition everything from this generation to the next generation. Hopefully it sort of boosted that and help move things from the backburner to the front work.

9:19
Okay. I have a question in the chat for you. And we let’s get to that. When we select things to be continued, you know, we’re talking about the continuity, things that we have always done isn’t important that everyone sees value in those things that we’ve always done, or is this an opportunity to discuss fundamental differences?

9:44
I like the question, and that just means when I say that it’s giving me a few seconds to reflect and figure because because it’s not an either or it’s a yes, and it’s a both and and the the trick is to involve people from the whole family from different generations, in the exercise of looking back at how things were always done. To appreciate the good things that are there that you want to continue to highlight the mistakes that might have been made along the way and and make everyone understand that mom and dad were not infallible and they made mistakes too. And that’s always good to remember to look at some of the old things in the light of Well, that was kind of old fashioned way to do things. But I understand that back then you did, and to recognize the pivots and the improvements that you’ve had to make along the way from getting to the past today. And then to continue the conversation again, with all the different people from the different generations to say okay, now that we’ve looked at where we were to get to where we are now, what are the important things that we want to keep and what are the things that we want to change to continue to evolve? And so I what I’m trying to get at is, I want to get away from the older generation, putting their foot down and saying it needs to be like this and the new the younger generation saying no, we got to go here. And so can we let’s meet in the middle and talk about it all and talk about it going from the past through to today. And making sure we all understand all the good and bad things that have happened along the way. And using that information and that sharing and putting all those stories on the table and then say okay, now we’re here. And these are the key people around the table who were involved back in that part. Well now there’s other people on the table who are going to be more involved going that way. How do we do this, but it really needs to happen. It needs to be co creative and have the conversations as a family with the different generations around the table. Recognizing the past and figuring out what you want to continue and knowing that some things will change but I’m imagining there aren’t that many complete radical changes. And if there are that’s okay, too. But then recognize that it’s not a continuity. It’s a sort of a winding down and starting something else. If that’s what makes it work for the rising generation. Then that’s another conversation to have that’s that’s slightly different from continuing a business that’s there. And that’s a whole other ballgame about that. I’d like to talk about having having family business leaders say I want the rising generation to be interested in business in general. Not necessarily my business. And if I can help my kids to have a business that really gets them excited to get out of bed in the morning and go to work, let me help them launch that. And if the business that I’ve been working in for whatever number of years needs to sort of wind down then that’s a different conversation to have

12:53
Okay, so we didn’t get into your bio, Steve because it the bio comes out while you’re talking but one thing I’m not sure if everybody on the call knows but you are involved in a family business as well. So you have first hand experience of what goes on in a family business. Have you in your family business ever used a facilitator to those tough questions? Whether they be a formal one, I know you’ve got the talent for it. So might be not a fair question. But what’s your idea? What’s your perspective on facilitators? Oh,

13:25
let me tell you this. So So we had our liquidity event back in 1991. When I was 26. And I just got my MBA from down the road at Ivy down the road from where you guys are. We had had one family meeting that my dad had called because he was a member of Cafe way back in the 80s when it had just started and they said you should have a family meeting. So we had this retreat back when I was 1985. And he didn’t think he needed a facilitator and wanted to do it all by himself. And then we had this clunky weekend retreat and it never happened again. And because there was no continuity of the fact of creating a habit of having regular annual meetings, and bringing someone in to help with it. And so then we didn’t have another family meeting until 2006 When he got diagnosed with cancer. And so that’s that’s too long to wait in between family meetings. So if we had had a facilitator, we might have had continued meetings and had a lot of different progress. And that’s when I was in the FDA program, like Brent was talking about and they were talking about, you know, having meetings with families and bringing people in to help them I was thinking wow, all the things that might have been if we had gone that that route

14:41
could get him another question. Should family business culture be established and agreed to before the conversations begin?

14:58
conversations can start at any point and should start early and often. Some of the earliest conversations should be ideally around the question use the word culture. I would I would pivot that or change that a little bit. Normally, people talk about values, common values. And so there are ways to get to, you know, doing exercises where everyone figures out their own main driving values individually, and then an exercise to bring those together to draw out the common values. And if you can find two or three values that everyone sort of has in common to use that as your basis to go forward makes a lot of sense. I’m sure that the culture that the person asking the question was referring to is very much intertwined. With the values. And so I’m trying to imagine the questioner posing the question that way, and I’m picturing a situation where one generation has a certain culture and work ethic that goes with it and maybe there’s some younger people coming along that have a different style. And yes, it’s important to address that and it’s important to direct address it early. It’s also important to address it. collegially in a non confrontational style, I know that younger people today have different work styles and work schedules and so people who are used to coming in at eight in the morning and working till six, and then their their son or daughter or nephew or niece likes to come in at 10. And that’s perceived as oh my god, they don’t get the culture, but then, you know, they might stay there until midnight, or they just you know, I have a son who’s 20 and he says his ideal working time is from 10pm to 4am. And I don’t know if it’s and so I think we need to accommodate the different styles of people. But maybe we need to examine our culture in a way that we actually noticed that they’re based on the same values and that maybe that just the timing, and the younger people who are kind of like bull in a china shop, saying I’m going to do it my way. And I don’t care if you want me anything, but everyone has to sort of give a little bit to get on the same page and have those having those conversations around the subject can be delegated, but it’s important to sort of clear the air on that because otherwise, these this, you know, Dad fuming in his office because somebody came in late again, if that goes on and on it can build all kinds of resentment. That’ll be harder to resolve later.

17:55
Yeah, exactly. We’re getting some great questions in so I’m going to keep going with the questions in the chat. First one is definitely I mean, I alluded to your family business, but can you tell us a little bit is it continuing and how is it continuing?

18:10
So what happened with us is we had a liquidity event so my dad sold the operations of the business, we kept the structure of the business, the corporate name, and we became what I didn’t realize at the time, but was essentially a family office, which was a holding company that had some money from the sale of the business. We still had the real estate from the operations we had sold. We have some patented products that were held in that that were licensed that were an income stream, and I ended up managing that. So our business went from 250 employees to four and two of us were named Steve Legler. And I was Steve Legler, Jr. My dad had gone off to his farm to breed cattle, and I was running a family office but it was 1991 Nobody knew what a family office wise least of all me. And so my dad has passed and I still have annual meetings with my mother and my sisters. And we have our one outside adviser who used to be the CFO of our operating company, who’s now the secretary of our holding companies. And he’s our outside adviser and that person have a love to refer to that families often should be looking for is someone who sits around the table with them but who has a different last name. So this guy Tom is known and loved by all the family members, he goes to my mother’s place to pick up her stuff to do her taxes and Caesar. He used to work with one sister of mine and so he’s like, as close as you can have to a family member without being a family member. And he is actually a very important part of the whole thing. Because as the person who’s managing the assets me it’s a lot easier for me to sit down with my mother and sisters with an independent outside person who’s done the books and presents the results of what what the investments have been doing, than if I have to do it myself. And so we’ve benefited from, from that having that kind of a person and now I offer that kind of a service to other families as well, having learned how important it is within my own family.

20:14
Excellent. Next question, Steve, are you saying that the leading generation shouldn’t necessarily pass the business down but more give the next gen the option to take the business or to cash out and start something else that might and this is their words, not mine turn their crank more?

20:36
I don’t know that I would have said it that way. But I can’t say that’s not what I’m saying. Because essentially, I wouldn’t have put that much detail on it. But it could certainly play out that way it could, it could play out that you know, hey, come and join the business and not so sure. Well, hey, what if we could sell this business and with some of the proceeds of that I could seed or fund you to go into a business that you want to go to? Yeah, that that is what I’m saying? That it doesn’t happen necessarily in a, you know, ABC stepwise way. It could happen with someone who’s already been working for you for a while but who, you know, sees that the future isn’t as bright as maybe you saw it. Maybe some of the things that have changed in the last few months. I’ve just sort of Fast forward to that. And if there’s someone in the in the family who has a great business idea that works with where the world is now and works with their skill set and their desire that turns their crank. If there’s a way to have this business that might be on the downslope to somehow translate into something that has more of an upslope. Yeah, that’s what I’m talking about. Okay,

21:57
okay. It’s interesting. You know, the fact is that I’ll just look at my family, you know, you’ve worked on it. You’ve been there for decades. You still feel it has a lot of merit yet and you want it to keep in the family, but they the family wants to take it in a different way. It’s, it takes some doing it takes some thinking through that

22:21
difficult for many people, especially founders, whose to realize that maybe the best thing for their family long term is for this other child that they have, which was their business to actually, you know, change radically or even disappear in order to help propel the real children. into bigger and better and greater. It’s meant to be a hard pill to swallow. It’s a hard realization for many people, especially founders to say that business that I created, at some point won’t exist anymore. It’s not I’m not saying it’s easy. Sometimes though. It’s it’s the right thing to do, and it’s the best thing to do for the family. And ideally, the both generations of the family are involved in that discussion. I can tell you when I came back with my MBA, getting ready to take over this business my dad called me in his office the first day and said, We got to do something we got to sell we got to close we got to merge because our markets had been disappearing. So I was told about it. I wasn’t really asked about it and I’m okay with it. Believe me I was it was in many ways a relief. To not have to fulfill that obligation I felt that I had from birth to take over this business because it did not turn my crank in any way. But I thought well I could do this and it was the path of least resistance and it was the dutiful thing to do. But I was not involved in should we or should I just gave my dad the blessing, hey, you built this, you do what you want with it. And as it turned out, it worked out pretty well. And so once again, that was another example of him having the forward thinking ability to do what was right. But I recognize that many founders in his place would have hung on and hung on and, you know, tried to make sure that he left something for me to take over. But he saw the writing on the wall as he saw it and did what he needed to do. And I recognize that that’s not easy for everyone to do. Hopefully, they’ll get to that decision if it ends up being the right one and not wait until things have gone too far to where they can actually profit from all the work that they’ve put in.

24:44
Excellent. Okay. Couple more questions here. What do you think, got in the way of you asking for a family meeting? Or more regular meetings instead of waiting for your dad to arrange it? Why didn’t you do it? Or rather than waiting? No.

25:00
I didn’t. I didn’t realize right now i this this whole space of family businesses is my sandbox and I know everything that’s going on and I I’m very plugged in with what other families are doing and I have contacts in many other countries and and the space has evolved a lot. So so the just the information about what family successful families have done, just the the terminology of family counsel, family assembly, family values, family, mission, state, all these things have evolved. So I that was back in the 80s, early 90s What I’ve ever gotten to this, I don’t know because I would have been like I have two sisters and they were not involved in the business. I probably would have not wanted to have a whole big family thing because I wouldn’t have wanted my sisters to be sticking their nose in the business at the time. So I’m hoping that a lot of you know about the three circle model which I have on the back of my business card which has the three circles of family business and ownership. I used to think that the business circle was the only circle. And certainly if there were other circles, it was clearly the most important circle. Now I realize it’s the family circle, that’s the most important. So it’s also the most neglected circle, often and that’s where families need more help. And that’s where I also feel I have more of a natural ability in the Family Circle, which is so so I understand the business circle but I always love in my work to talk about all the family stuff, because that’s where you have a lot more you know, you have people working in the business, you have people who aren’t working in the business you have some are owner, some are not owner. So there’s a lot of different perspectives that need to be brought together to a common common and clear understanding. So I like to play in that area. I didn’t realize how important it was. And I probably did not would not have relished having any situation where where if I was going to be working in the business that my sisters would have anything to say about what was going on.

27:12
So So you’ve learned you’ve gotten to a now taking your learnings and that’s great. Another question, what are some criteria to think about when looking for a moderator a mediator for family discussions? And how do you account for the fact that different gents may have different preferences and who they work with or the method they use? The question

27:35
that’s yeah, that’s a that didn’t specifically ask about a certain thing, but I’m going to throw it out there because I’m sure it’s it’s part of the whole question is bringing someone in that everyone can agree on. And you know, Dad hiring another guy with gray hair to come in and sort of that he can tell what to say and then now tell my kids to do this because they don’t listen to me. Maybe they’ll listen to you. That doesn’t typically work very well. Having one person in the family reach out to someone give them the whole story and then having that then having the the outsider come in that outsider will likely be already sort of tainted with that one person who brought them in so so that person can very quickly be tainted as that guy even if that didn’t sort of try to brainwash him of what he wanted. So, the key is for, I think more than one person to do the interviewing or the selection process. Hopefully the age of the person is not so close to one generation or another. So I was born in 64, which is the end of the baby boom. So it just so happens that a lot of baby, most baby boomers are older than me. And so their kids are younger than me. And so they’ll have kids that are maybe in their 30s My kids are just like around 20 So there’s there’s enough of a gap that that you ideally want them to be in between the ages of the different generations. The most important thing is that the different family members trust and can buy into the person that that they will actually be neutral and unbiased because as soon as you get the feeling that this person who’s come in is trying to sell something for one person or one branch or one generation. The chances of it working well go way down. Okay, so So do that. Do the due diligence and the interviewing upfront and make sure that it’s done by at least two if not three people to make sure that everyone sort of says okay, let’s give this person a chance. I think that they can relate to all of us as more or less equals what we’re trying to do is work on adult to adult relationships between the different generations. And so the the person coming in from the outside also has to treat everyone like an adult. Good.

30:13
So we’re getting to near the end of it. We have a couple of minutes left, but there’s still a couple of questions and really great. It actually came to my mind to follow your comment three other siblings that aren’t involved in the natural response that one really doesn’t want their involvement because not because they just don’t know. But how can one ensure that the uninvolved siblings don’t feel totally left out of the family business?

30:41
And often they will feel left out. And that isn’t necessarily a problem for the business, but it can be a problem for the family. So there that’s where I’m going back to those circles. So so each of those circles and let’s forget about ownership for a while but just concentrate on the business and the family. The family of the business typically will have its own leadership. It’ll have its own president or CEO. It’ll have its own people in charge. of different things. It’ll have its own governance structure, maybe whatever committees that it’s running. And the family will have a group of people that don’t necessarily come together in an official capacity and they don’t necessarily have their own leadership. And so I’m, what I’m advocating for is is creating something around the family, whether it’s a family council, a regular family meeting, developing some some kind of regular repeating every couple of months have a meeting just with the family that includes those other people and making sure that the people who are in the business when they speak to the people in a family meeting, are talking to them as family members and of not trying to sort of sound smarter than them or talk down to them about well, I know this business and so like let’s bring it down to how the business affects the family and sort of level that playing field because the people who aren’t involved will often feel dumb and and will be afraid to ask questions. And the smartest thing that the person in the business can do is to try and help bring the other siblings up and share the information and explain things in a way and have the visits so that they understand because otherwise that’s where the mistrust comes in. Right? If I’m the brother who’s working there, and I keep telling my sisters Yeah, don’t stick your nose in and just shut up and don’t worry they’re they’re going to start to worry what it’s like to be with them on a regular basis. And I’m transparent and I share with them and I treat them as adults as other key stakeholders that I want to keep informed. Because otherwise who knows I don’t know what the ownership is. But if eventually they could get together and fire me. Well, I had to be aware of that and try and get out in front of it and have a more harmonious relationship with

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