CEOs Role in Family Business

I first met Roland (not his real name) in 1972. He was a high school student working a summer job in his father's business.

"We're teaching him the business from the ground up," his father told me proudly as he introduced me to the tall good looking kid. We shook hands, exchanged a few words, then Roland jumped on a fork lift and was off to stage another delivery.

The next time I saw Roland, he was approaching 40 years of age and had served four years as company president.

The business was located in a fast-growing metro market, but under Roland's leadership, sales had not kept pace with the growth of the market. His father, now retired, suggested that he bring in a consultant to take a look at the business.

We met at my hotel for breakfast. In many ways, he had not changed all that much. He was wearing jeans, a red flannel shirt, and a pair of cowboy boots. His image was far from that of a company president.

Roland got immediately to the point, "What do you need from me to get this project started?"

"Let me begin by asking a couple of questions," I answered, "What is your vision for this business?"

"How do you mean?" Roland asked.

"What are you trying to make happen here? When December 31st rolls around, what evidence do you look for to determine if you've had a satisfactory year?" I said, trying to clarify my question.

"Well, if you're talking about strategic planning or budgeting, things like that, I don't do any of that," he responded bluntly.

"How do you personally spend you time every day," I asked, trying a different approach.

"It depends on where I'm needed," he said. "Sometimes I'm doing the buying, but other times, like when the warehouse foreman doesn't show up, I'm working out back."

"How much time do you spend in the office?" I probed.

"As little as possible," he fired back with the hint of a smile.

"Sounds as if you don't like office work," I asked in a feeble attempt at humor.

"You got that right."

"Your dad says that sales haven't kept pace with the market. Do you have an explanation?"

"Yeah, I can't find decent salespeople."

"Who's in charge of recruiting salespeople?"

"I am!"

Roland didn't have a clue what role a CEO should play. He had graduated from college, but with a meaningless degree. When he rejoined the family business, he received no preparation for taking over the reins; he had grown up working with his hands and that is still what he enjoyed most. When he was made president, it was in name only.

I interviewed a couple of salespeople whom Roland had been unable to hire. They told me that they didn't want to work for a man like Roland, and referred to his lack of sophistication and his abrupt communication style. Their image of Roland was not that of a leader, so they each opted to take jobs with more progressive businesses in the area.

At the end of my visit, I suggested that Roland hire a general manager who had the talent to perform the essential business functions that Roland hated so much. To my surprise, he didn't resist the idea. He was not stupid; he knew full well that being a company president was not his cup of tea.

Today, the company is growing and earning more bottom line profit than ever before. Roland is the happiest he has been in years.

Lesson: If the owner doesn't have the talent or the willingness to prepare a strategic marketing plan or hammer out an annual capital expenditure budget and an operations budget, hire someone who does. There is no rule in business that says the owner has to be the general manager.

Management acumen is not always passed down to the next generation.

Bill Lee is a business consultant who works with owners who want to put more money on the bottom line. He is author of Gross Margin: 26 Factors Affecting Your Bottom Line. $29.95 + $5 S&H. http://www.mygrossmargin.com; Blee@mygrossmargin.com

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