Beyond Strategy: Relationships are HR's Core Currency in Family Business Succession.

Welcome to the Built by People podcast, where we share the stories and insights of the world's top HR leaders. Join us as we dive deep into the minds of HR executives, uncovering their strategies, challenges, and triumphs in shaping today's workforce. I'm excited to welcome Ray to the Built By People podcast. Ray, thank you so much for joining us. And as a starting question, I always love to ask if you could share a little bit more about your career journey.

Sure. And thanks for having me on the program. Well, I have a little over 30 years experience in a variety range of HR roles. I've worked in public companies like Waste Management, private equity organizations like ServiceMaster and Terminix, city government, CTA, and most recently with a private family-owned organization, Spartan Light Metal Products. Those have ranged in size from 1,000 employees to 50,000 employees. Have pretty much held positions on both field and corporate roles, as well as a non-traditional start in risk management. And from there, found myself doing more and more HR work and transitioned into HR. And I was fortunate because in those companies, they pretty much took an entrepreneurial approach to developing people. And if you were willing and had the drive and were successful, you could go into areas where you might not necessarily have the standard background for it. So that enabled me to play on both sides of the HR fence, if you will, on the HR generalist side as well as the learning and OD side. And that's been very, very helpful for me throughout my career. And now I'll be shortly leaving Spartan Light Metal Products and starting my own consultancy.

Excellent, Ray. And Ray, you've been instrumental in managing succession planning at a family-owned business. What are the unique challenges and opportunities you've encountered when transitioning from family to non-family leadership?

That's a real good question. And it applies not only to the folks at the top, if it's a CEO leaving and a non-family member CEO taking over, it also applies to any of the other positions family members may have within the organization that are leadership positions. And you cannot underestimate the amount of visibility and attention that those roles get. Both for the family member as far as where they're moving in the organization, as well as the person that follows behind them. So, you know, first is that a lot of visibility to it. You need to put a lot of communication and have a lot of stakeholder management coaching around that because, you know, people will say, well, hey, they're getting that position, whether it's a position in the organization because they're a family member and that, you know, the person that's taking their spot, well, You know, they're not going to be able to do as much as the family member did. So, pretty important to make sure folks understand what's going on. I think the other thing that's important to recognize is, you know, for the family member, this is their life. You know, it's talked about at the dinner table. It's how they go on vacations. It's what their livelihood is. And we all spend a lot of time at work, but when you add that family dynamic to it, any of those changes in the organization take on a lot more importance and impact for the family member. So you really need to be thoughtful about how those transitions are managed. I think the other thing is that if you're looking at the top level, you know, if somebody is running the company or running a business unit and they move into another role or exit the company and the non-family member comes in, it's tough to let go. You know, when you have folks that are working 20, 30, 40 years in an organization as a family member, as an owner, and then they're not there, it's tough to let go of the reins. So it takes a lot of intentional coaching and a plan to lay out how is this transition going to happen, what are the rules of the road as far as the transition. And for the non-family member going into the position, again, whether it's at the top or another leadership role in the company, they're not the family member. So no matter how good they are, it's like, well, gee, are they, are they really getting the things done that they need to compared to their predecessor? So again, a lot of communication, a lot of coaching on a whole variety of levels to make sure things go smoothly.

Ray, with employees who have spent their entire careers at one company, how do you balance preserving valuable institutional knowledge while driving necessary organizational change?

That I found was a very interesting one as both Spartan and even, you know, a lot of the other companies where we did a lot of acquisitions of family-owned organizations. And it really comes down to respect, care, marketing, and making sure you have an underlying theme of unification because you have the insider-outsider effect. You know, you have the folks that have been there for a long time And if they've been successful, it's like, well, hey, we've been doing this for decades and we've been really successful. New person comes in, new ideas. Well, we don't need to do that because we've been successful. So I think, you know, one of the things we did was we actually, for onboarding new leaders, we told them, look, for the first 90 days, you really need to work on building relationships in the organization. And you need to work at making sure the organization knows you. So build that relationship first. Don't worry about getting, okay, here's what I've accomplished in the first 90 days. You know, I've turned it on its side, I've put all these changes in place, and boy, we're making more money now. Isn't that great? That, that doesn't work in that environment. You know, you need to take more of a Socratic approach where you have somebody come in, they build a relationship, and then start to put ideas out there that, well, hey, this might be different than what you're, what you're doing. What do you think about that? And I think if people are thoughtful about that, it really goes a long way in making that person successful because once you build that relationship and that foundation there, what I found is that team that's been there for a long time embraces that person and helps make them successful.

Brad, can you share your experience in developing the next generation of family leadership, particularly regarding your work with the a G3, third generation at Spartan?

Sure. I think, I think, you know, when you look at that, whether it's at Spartan or whether it's elsewhere, you know, the first thing is, okay, here's, here's somebody, you know, are they going to be just an owner, passive owner, and just want to, you know, get the income from the company and not very, you know, be very involved? Do they want to have more active ownership or do they actually want to work in the company? And if they want to work in the company, what do they want to do? Do they want to just work in the company to become a better owner or do they want to be, CEO. There's two different tracks there. So for the passive ownership, those folks need to stay informed. You need to keep them informed and have a plan to do that. For the active ownership, that's more involvement in the board activities, the board committees, maybe getting more of a deep dive into the organization and the operations of the company. And then for those working in the company, again, similar to other leaders in the company that you look to develop, The question is, okay, you're an owner, that's one thing. You're working in the company as whatever position it is. What do you want to do? Do you want to ultimately run the company? Because that would be one track to follow. Or do you want to become a better owner? And if you want to become a better owner, that might be a slightly different track. And I think reviews to both at Spartan and other places I've worked, pretty much all of those approaches. And it's pretty much set up to help facilitate getting exposure for the person and make them a better owner. So for example, if somebody is going to be a better owner, a rotational assignment in HR and then over into sales and then maybe over into a part of operations and then maybe over into a part of finance so that they have a better understanding of the entire organization And again, with those moves, I think it's important for the organization to know and for the person's manager to know, well, hey, we're doing this because of this plan that we have to help this owner become more effective down the road in their role as an owner. So yes, they're going to be in this position for a while, but they're not here to run finance necessarily. And then again, take the same approach if the interest is in becoming the the CEO, what does that look like and what is that pathway to get there?

Ray, as someone who's helped transform board dynamics, what do you see as the key elements of an effective relationship between the board and the senior management team?

Where I've seen it work best is when the, you know, person on the senior management team and the board members both try to spend some time together outside the meetings. The meetings, you know, there's a number of things you want to accomplish. It's maybe 4 or 6 times a year, full committee meetings, maybe the same number or a little bit fewer for the subcommittees that are out there, like the Human Capital and Compensation Committee. But you cannot rely just on those interactions to build a good functioning relationship. I think where I've seen executives have really good relationships with the board and being able to have good conversations those are the folks that took the time to have conversations in between or have meetings in between and seek advice in between. And I think it's also incumbent on the board if they haven't heard from, you know, a member of the senior team, you know, to reach out and talk to them. So I think that is key. I think the other thing that's key that I think it's an opportunity for a lot of boards that I've been exposed to is to do you know, some self-reflection. You know, that board is— I think sometimes we think, well, gee, there are all these executives, A-players, you know, great resumes, they're going to function as a high-performing team. That's not necessarily the case. And so I think, you know, having a survey where you survey the board on, you know, how are we doing as a team? How are the meetings? As far as the meeting, are they functioning well? Do they get the right things done? And then get feedback on themselves, you know, as a board member, you know, give a critique to the other board members and then do that anonymously, similar to like a 360 survey, and then provide that feedback to the board. I think that's essential. And I think if you include the senior team in that, I think it's even more powerful because a lot of times there may be things that are lying underneath the surface that never get the opportunity to see daylight. And if they do, it makes a big impact on what could be a more effective meeting, make more effective decisions.

Ray, in your transition to advisory and consulting work, what gaps do you see in how companies approach succession planning and board effectiveness?

I think right now what I'm seeing is there's an opportunity to get a lot better understanding of the breadth and differences across all the different generations that we have in the workplace. As I reminded people at Spartan, hey, you're managing 5 generations. Do you understand all 5? The training you received before you became plant VP to run the plant might not really work with a good portion of your workforce. So I think there's an opportunity there to get a lot more understanding about what those different generational differences are, what the different motivators are, what drives people, what are they looking for, as well as what their expectation is of the workplace. You know, it's not 30 years and a gold watch at the end of that. And there is going to be, you know, a lot of transition and a lot of moving pieces. So I think that's a key thing that folks need to take a look at, and that current leaders need to get more coaching and training in how to do things differently with all these different generations. So, I think it's on both sides where there has to be a better understanding of what the dynamics are.

Ray, any parting advice you'd like to share with our community?

Yeah, thanks, thanks for asking that. I think I'd probably divide it into two buckets. One, you know, kind of the traditional business-based advice. You know, be an advocate and a guardian for the people, and you'll be an advocate and a guardian for the business, right? You take care of one, it takes care of the other. Somebody that grew up on the Lower East Side of New York, I'd say you, you best be agile. You have to be more agile now and down the road than you've been in the past, and that's not going to change. You also need to be able to thrive in an ambiguous environment, and I think most important, you have to stay fresh. And I don't mean just with the latest HR stuff that comes out, but, you know, what's the latest that's happening in our world? What's the latest happening in our lives? Because what those young folks and teenagers and those earlier generations that are coming up, it's a completely different world. And it's going to be that— those are the— that's the feeder pool that's going to feed the human capital engine that you're going to be managing. So you really need to keep your eye on that, in my opinion.

Ray, thank you so much for joining us on the Built by People podcast. It was a pleasure having you involved.

Same here. Thank you very much for having me.