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DCU CFB National family business conference 2016


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DCU Centre for Family Business national conference 2016

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DCU CFB National family business conference 2016

  1. 1. Attracting and retaining family and non-family talent in your business 12th April 2016 #CFBconference
  2. 2. Mr Jim Ethier Bush Bothers & Company Keynote Speaker
  3. 3. BushBrothers&Co. Spillin’ the Beans
  4. 4. “Spillin’ the Beans”
  5. 5. 2016: The Year of the Pulse
  6. 6. MillionsofPounds Sources: Syndicated sources including SAMI; IRI; ACNielsen Scantrack; ACNielsen Homescan; Nielsen Grocery plus Wal-Mart Supercenter sales estimated from 2002-2007 based on panel share of Grocery & Supercenter; 2008-2009 from 4th Channel Panel; 2010-2014 from Nielsen TUS Food + WM SC Bush’s Best growth in the Prepared Beans Category began 35 years ago 6
  7. 7. A.J. & Sallie Bush
  8. 8. Mission Statement Bush Brothers & Company is a community making a difference by providing nourishing branded bean products. As we perpetuate and strengthen our company, we will provide with reasonable balance: • Value to our consumers • Service to our customers • Opportunity to our team of employees • Enhanced value to our owners • Stability to our suppliers • Responsible citizenship in our communities Together, we will live by the values of integrity, responsibility, trust and caring as exemplified by our founder, A.J. Bush.
  9. 9. Beyond Survival by Léon Danco
  10. 10. Organization Chart
  11. 11. Léon Danco
  12. 12. Family Vision VISION The Bush Family is the steward of a family-owned enterprise that creates value and is committed to its community of companions, today and for future generations. Together, we will live by the values of integrity, responsibility, trust and caring as exemplified by our founder, A.J. Bush. GUIDING PRINCIPLES We support and contribute to the vision, mission, and strategies of Bush Brothers & Company We cultivate engaged and responsible ownership through lifelong education We develop and encourage family members to participate in our family governance structure and/or to become qualified company employees. We are committed to making Bush Brothers & Company a great place to work We promote family unity through communication, collaboration, and shared contact within and outside of family enterprise meetings We embrace opportunities to give back as a family enterprise to our communities and the world
  13. 13. Homeplace
  14. 14. School to Medical Center
  15. 15. A.J. Bush General Store & Visitor’s Center
  16. 16. Community of Companions
  17. 17. Family Directory
  18. 18. Shareholder Handbook
  19. 19. Charles Handy “An organization’s ultimate purpose is to aim for immortality, to create a community that will last not only through your lifetime but that of your grandchildren, should they choose to work there – and you would hope they would. To do that, of course, you must finance your future. It must be a good place to work. And, by God, you must have products customers want to buy. But all these things are a means to an end: to be an everlasting community that adds wealth to society.”
  20. 20. Best practices for non-family involvement: lessons from Irish family businesses #CFBconference
  21. 21. Ms Eimear Lynch Stafford Lynch Our panellists Mr Paul Keogh Ballymore Group Dr Eric Clinton DCU CFB
  22. 22. Best practices for non-family involvement: lessons from Irish family businesses #CFBconference
  23. 23. Welcome and Good Morning! Eimear Lynch Company Secretary and Assistant to CEO & Founder.
  24. 24. A Bit of Background! Graduate of DCU – Marketing & Fr/Ger Diploma in Spanish Diploma in Digital Marketing 25 years in SL Primary area of focus marketing and strategy. Company Legal and Secretarial work.
  25. 25. Stafford Lynch Company Overview
  26. 26. A Few Quotes : “When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much the old man had learned in seven years.”– Mark Twain “Call it a clan, call it a network, call it a tribe, call it a family: Whatever you call it, whoever you are, you need one.”– Jane Howard
  27. 27. Meet SL – Sandy Lynch Rumoured to be in pole position for role of MD. Young and inexperienced but very enthusiastic!
  28. 28. THE LYNCH FAMILY: Matthew Lynch- Founder and CEO Was ex- Erin Foods. Sold Sudocrem to Forest Laboratories in 1989. Garrett Lynch – Was DS NAM and now Foodservice Director Una Lynch- Management Team and founder of the foodservice division. Kevin Lynch- Works outside the business.
  29. 29. OBJECTIVES: To trade profitably. To ensure future success of business. To attract and retain key staff. To function as cost effectively as possible.
  30. 30. Structure of the Board: Chairman Professional Finance Professional IT/ Operations Professional Sales Shareholders
  31. 31. Company Overview 41 years in operation. Turnover €45m. 104 employees. 80,000 sq ft facility.
  32. 32. Our Brand Partners… GLOBAL BRANDS, LOCAL EXPERTISE
  34. 34. Major Issues when dealing with Family: Parity of Esteem within the family Family Constitution vs Shareholders Agreement Suitability for the role Behaviour speaks louder than words Clarity and Respect for Senior Managers 3rd Generation family Succession
  35. 35. Incentivising Non- Family Members Equity vs Profit Share Equal opportunities Keep family disagreements out of the Boardroom. Work with your strengths: 1. Flexibility in the workplace 2. Speed of decision making 3. Autonomy
  36. 36. Issues for Family Members: I made the decision when I came to Seagram that it had to be OK that my public persona would be bad. It's the downside of a family business: anything good is because I'm somebody's son; otherwise, I'm a schmuck. Edgar Bronfman, Jr.
  37. 37. Challenges for family members: Many of the tools used to retain non-family talent are never applied to family talent. Little or no feedback No Appraisals Responsibilities to employees
  38. 38. The Next Generation! “A man should never neglect his family for business.” Walt Disney
  39. 39. Dr Melrona Kirrane Organisational Psychologist, DCU Business School Professor of Leadership, PNU, Riyadh
  40. 40. 41
  41. 41. Guiding Philosophy • Holistic view of the employee population • The workforce is regarded as a valued entity • Providing guidance and support to achieve full potential • Shared vision within a supportive culture EDUCAUSE Live!
  42. 42. Traditional Employment vs. Talent Management Focus Traditional Employment Focus Talent Management Focus  Skills & education  Duties & responsibilities  Some characteristics (strength, repetitive, endurance, etc.)  Experience Traditional plus more scrutiny on …  Traits  Behavior  Talent  natural aptitude or skill
  43. 43. Talent Management practices must be aligned with Strategy
  44. 44. The serious side • All companies registered in Denmark are required to include in their annual reports information about customers, processes and human capital. • A minimum of five measures for each is required and comparisons with the previous two years must be shown. • Information for investors about intellectual capital both current and future should occupy at least one third of the report.
  45. 45. Differences between family and non-family businesses Ownership Governance Return Rewards Networks Leadership Careers Management
  46. 46. These differences result in barriers to professionalization  1. Cognitive impediment  Family business managers may not recognize the need for change
  47. 47. Environmental Disturbance Poor external alignment Outcomes Decreased customer focus Increased Cost Less innovation Do more of the same Denial & rationalisation Declining performance Death spiral Learning disabled Success Syndrome Complacency Arrogance Internal focus Prolonged period of success The trap of success(Adapted from Nadler & Shaw 1995) 48
  48. 48. 2. Cultural impediments  Norms of kinship systems at odds with economic rationality  Their need to channel resources into their venture conflicts with obligations from the webs of kinship  If they prioritize family membership less than is normative in their culture, emotionally painful conflict is liable to occur
  49. 49. 3. Emotional impediments  Parental altruism  Parental recognition that children should develop independence, which conflicts with a desire to indulge them.  Similarly, siblings or cousins might recognize the need to promote the most capable offspring but find it hard not to view their own children as more capable than their nieces and nephews
  51. 51. PLAN AQUIRE ENGAGE DEVELOP DEPLOY LEAD RETAIN EVALUATE 70% of organizations have a weak pipeline. Cost per day when operating without a key player - €7,000 Cost of poor hire – €300K - €500K impact Most businesses operate inefficiently due to poor levels of engagement levels 6 months is time required for a new manager to become productive 20% of a company’s employees are well suited for their roles 12 employees are directly affected by average manager’s actions Cost of losing a talented employee – €250K-€500K Value of top performers – 2 to 3 times the performance of average employees
  52. 52.  From 1998 to 2006, the stock of the companies identified in Fortune’s “100 Best Places to Work for in America” list outperformed that of the S&Ps 500 by more than 230%. —Fortune, 2006  Organizations that apply talent management practices demonstrate higher financial performance compared to their industry peers. —IBM/HCI Research, 2014  Companies with superior human capital practices can create more than double the shareholder value than companies with average human capital practices. —Watson Wyatt Research, 2013
  53. 53. “You have to treat your employees like customers. When you treat them right, they will treat your outside customer right. This has been a powerful competitive weapon for us.” —Herb Kelleher
  54. 54. The New Metaphors • People are not your most important asset, the right people are • The metaphor of The Bus • PepsiCo 5Rs – People – Skills – Job – Time – cost
  55. 55. Characteristics of human-capital centric organisations 1. They're obsessed with talent 2. The business strategy hinges on talent 3. Performance management is a top priority 4. Board members are experts in human capital management 5. Hiring and review processes are rigorous 6. Job descriptions can be vague or open-ended 7. They offer employment contracts 8. They don't hold back technology 9. Employees share in the company's financial success  Lawler, 2008
  56. 56. Five Basics in Implementing Talent Management 1. Identify and Assess Existing & Needed Talents 2. Hiring and Developing Staff 3. High Value Appraisals 4. Understanding Compensation & its Impact 5. Turnover and Succession Planning EDUCAUSE Live!
  57. 57. Talent Management Adoption Model Human Capital Institute, 2010
  58. 58. Step 1: Enterprise Leader’s Mindset • Rough benchmark is at least 20% of time is spent on talent-related issues • Monthly talent reviews with business units are standard
  59. 59. Step 2: Process Building  Workforce planning, competency development, performance management, talent reviews, leadership development, internal mobility, and career development
  60. 60. Metrics  Easy and right  Critical few rather than inconsequential many  One time and ongoing  Summary and segmented  Visibility and action “Just because something can be counted, it doesn’t mean that it counts.” — Albert Einstein
  61. 61. Top Five Overall Talent Metrics • Segmented turnover data • Talent quotient (Hewitt, 2005) • Readiness levels for key positions • Segmented engagement levels • Number of strategic/critical jobs unfilled • Percentage of inside vs. outside hires for leadership and critical jobs
  62. 62. Step 3: The Guiding Coalition • The responsibility for talent must be owned by the line and leaders at all levels • The members of the coalition must be highly regarded by both leadership and peers
  63. 63. Step 4: The Manager as Talent Leader  The manager’s role is key in engagement, productivity and retention  Recognition and incentives must be aligned  Manager’s role must be aimed at optimizing and leveraging talent  Significant personal transitions must also be overcome for managers to be talent leaders
  64. 64. Step 5: The Employee as Initiator of Talent and Career Development • Employees start to drive conversations and action within a structure • Democratizing the process and “personal brand building” • Forces greater transparency throughout the organization • Emphasise with new generations
  65. 65. Talent Management Adoption Model
  66. 66. Succession • More than 88% of family firms choose someone from within the family, regardless of their ability to successfully manage the business • Lack of consideration of the successor’s capabilities is one of the primary causes of succession failure
  67. 67.  Leaving the company means leader not only assuming their own mortality, but also letting go of power  To feel capable of relinquishing control, the owner has to have trust in the offspring’s capabilities  depends primarily on the offspring’s skills, previous work experience outside the company, and commitment to the company
  68. 68.  Of businesses involved in family succession, only 30% are expected to survive the first generation  15% are expected to survive to the third generation  Less than 3% are expected to survive to the fourth generation
  69. 69. Individual factors  Successor  Low ability of potential successor  Dissatisfaction/lack of motivation of potential successor  Unexpected loss of potential successor  Incumbent  Personal sense of attachment to the business  Unexpected, premature loss of the incumbent  Incumbent’s divorce, remarriage, or new children
  70. 70. Relation factors  Conflicts/rivalries/competition in parent-child relationship and among family members  Perils related to high “consensus sensitiveness” of the family business  Lack of trust in the potential successor(s) by family members  Lack of commitment to the potential successor(s) by family members
  71. 71. Financial factors  Inability to sustain the tax burden related to succession  Inability to find the financial resources to liquidate the possible exit of heir(s)  Inadequate financial resources to absorb the costs of hiring professional managers
  72. 72. Context factors  Change in business performance  Decreased business scale  Loss of key customers or suppliers, or deterioration in the relationship between potential successor(s) and customers or suppliers.
  73. 73. Process factors  Not clearly defining the roles of the incumbent and the potential successor(s)  Not communicating and sharing the decisions related to the succession process with family members and other stakeholders  Incorrectly evaluating the gaps between the potential successor’s needs and abilities
  74. 74. Failing to train potential successor(s).  Late or insufficiently exposing potential successor(s) to the business.  Not giving the potential successor(s) sufficient feedback about the succession progress.  Not formalizing rational and objective criteria for selection.  Not defining the composition of the team in
  75. 75. Problems for children  Not being considered a viable successor, and experiencing conflict with non-family member employees  Parents continuing to intervene after retirement
  76. 76. Siblings  Parents’ comparisons between siblings increase sibling rivalry  Inside the family hierarchy, daughters and younger sons tend to rank lower than the oldest son which can generate even more rivalry
  77. 77.  The sibling rivalry problem can be magnified when an older brother works for the family business and the daughter acts against him for the firm’s benefit (e.g., reprimanding him for poor performance)  The daughter runs the risk of being accused of being disloyal to her own family, which is a no-win situation
  78. 78. Sons  Males are preferred for succession even over first born daughters
  79. 79.  Father-son succession is more harmonious, when the father is between the ages of 50–60 and the son is between ages 23–33.
  80. 80.  Father to son successions are affected by issues related to control, power, and competition  Son’s needs results in succession taking place too fast  Son’s desire to establish their own identity leads to competition  Pressure to outperform the predecessor leads to poor decisions
  81. 81. Daughters  Only 2% of daughters are likely to become presidents in family businesses  9.5% of family businesses report having a female CEO  Desire to ‘protect’ them?
  82. 82.  Women-owned family businesses are 1.7 times more productive than those run by men and are six times more likely to have a female CEO
  83. 83.  Women’s “feminine qualities”(conciliatory, attentive, supportive, cooperative) make them less hierarchical, more likely to take more time to make decisions, and more likely to seek more information on others’ opinions than do men  The female approach is seemingly well suited for family business management because they are more likely to attend to both the well-being of the business and the well-being of the family
  84. 84.  Daughters get a “double message” from parents:  Produce grandchildren, but don’t neglect the business
  85. 85. Recommendations for children involved in family business succession 1. Get an education (financial) and define your career goals prior to taking over the family business 2. Find a mentor 3. Gain experience at an outside organization 4. Have your own standards, not your parent’s standards 5. Don’t take over the business unless you feel a passion for it
  86. 86. Mothers Mother Father Daughter
  87. 87. Non-family members When a nonfamily member employee assumes the role of “second-in-command”  Feel threatened by the owner’s offspring in the business  Incentives must be offered to ensure their cooperation  Key employees must be notified of the succession by the predecessor
  88. 88. 1. Shared vision for the future to establish succession planning 2. Nurturing/Development of successor(s) 3. Selection 4. Managing the transition process 5. Attend to family dynamics Key take-aways
  89. 89. Partners
  90. 90. Supporters
  91. 91. Stay Connected +353 1 700 6921 @DCUCFB