Situation: The CEO of a business that has been in place for several generations is frustrated by the challenges of working with family members. Relatives are involved in top positions, but frequently place personal concerns above the priorities of the business. This leads to tense situations where other family members, not in the business, will intervene to support their close relatives without appreciating the conditions facing the business. Must a family business always be “family”?
Advice from the CEOs:
For the business to thrive, you must match skills and talent to available positions – not just the “best” family member fit for the position.
Understanding that it is difficult for one family member to communicate negative news to another family member, consider hiring a consultant or HR company to evaluate and be the go-between in determining best family fit, or family/non-family choices for open positions.
If the company involved unionized employees, and some family member employees are union members, this may complicate your choices. Seek outside non-union counsel to help you evaluate situations and navigate solutions.
Hire a professional facilitator to assist in running company planning meetings which involve family members. A facilitator can approach the situation from a neutral standpoint, and does not carry the personal history of brother-sister or close relationships within the company. Choose an individual with experience with family-owned companies who can build a company vision that goes beyond personal relationships and concerns. This individual can also help navigate the operational situations facing the company.
Look at both your organization and ownership structure versus applicable regulations and licensing requirements. This may present new alternatives for you to consider.
Situation: A company is in contact with an Eastern European company that seeks outsourced business from the US. The CEO seeks guidance on challenges managing as well as formalizing this relationship. What is your experience outsourcing to Eastern Europe?
Advice from the CEOs:
Location in Eastern Europe is important. There have been concerns with both corruption and IP protection in Russia. Some other Eastern European are more aligned with US/European values and farther up the ramp as outsource partners.
Experience of other US companies suggests that your spec must be written much more tightly than if you were doing the work here. If you can’t write a tight spec on the work, don’t outsource it!
Contract outsourced work on a fixed fee basis with the bulk of payment due on completion. This helps to assure that you receive timely delivery and the quality of work required.
Set up thresholds for the circumstances to engage an outsource partner.
Say one US worker is economically worth 5 foreign workers in your domain. Do you have enough work to support this?
Determine who will manage the outsourced work. A European is fine, as long as they have experience managing outsourced work.
Someone on your team will become their Project Manager. This can be VERY time consuming.
Consider setting up an offshore company to shelter some of the revenue from the outsourced work.
You want to locate the offshore company in a tax-free country, and to have them handle the funds connected with the outsourced work.
The contact in the tax-free country will likely be an accountant, lawyer or both. There are many reputable individuals who do this in tax-free countries, but be sure to check references and background carefully.
Situation: A company has hired a new employee with excellent skills who reports to a Director. This person is a self starter who prefers little supervision. Friction is starting to develop between the new employee and the Director. How do you resolve this conflict?
Advice from the CEOs:
This person was hired for their talent. However a successful hire takes account of talent, but also role, cultural fit, organizational placement and the needs of the company.
For example, if this person is strong in operations but they are now in client services, is this the right role?
Similarly, if the culture of the office emphasizes teamwork, collaboration and support, is this the right culture for this individual?
Be cautious before tweaking the org chart to create a new role for this person..
Consider both your current staff and the new person. You may be creating additional conflict if your actions appear as favoritism.
The dominant factor is YOUR plan. If the employee is wrong, replace the employee.
If an employee can’t get along with others it is a difficult situation to repair.
When you meet with the employee what should be said?
First, don’t try to solve the situation before you have a clear strategy.
Question and listen. “You’ve been with us a short time, and I want to check in with you. What do you think of your role?” Let the employee talk, probe for clarification of what is said. Take note of what is said. Acknowledge any requests but indicate that you will put them under advisement.
Do the same in discussion with the Director.
The key is that you are in control. Look at your objectives, and where you fit resources best within the org chart. Once you have your plan, communicate it.
Situation: A company is considering a merger. The other firm competes with customers who account for 25% of the company’s current revenue. How do you maximize the value of this merger to the company while mitigating the negative impact on current business?
Advice from the CEOs:
The maximum risk from the combination is loss of 25% of current revenue. The merger makes sense if you believe you will gain upside which more than counters this risk.
Both companies have brand equity. Maintain both brands and to continue to promote them. Maintaining both brands will buy you time to replace business which is potentially at risk.
Talk to customers and get their perceptions of the pros and cons of the potential combination. Ask about any concerns that they may have. Understanding the pros, cons and concerns will help you to mitigate negative fall-out.
Legally, in a 50/50 split, the Chairman will call the shots. You will have little recourse to counter the Chairman if he decides to fire you. This individual has built his company through previous mergers. Visit and break bread with those who were principals of these companies at the time they were merged or acquired. This will tell you a great deal about the individual with whom you entrusting your future. You will also learn what the others did during their mergers to help plan your own moves.
Give yourself a back door or Golden Parachute after six months if the merger does not go as you anticipate.