Case study: getting dad to step down

Nation's Business, March, 1998 by G. Jeff Mennen, Dennie L. Smith

After 15 years of working together at Ogilvee Equipment Corp., their growing and profitable mining-equipment company, Sam, 66, and his daughter Jennifer, 37, are facing a family crisis.

Jennifer feels that if their $12 million company is to continue growing, Sam must step out of day-to-day operations. Sam started Ogilvee, but Jennifer runs the business and is the acknowledged leader. Sam's role is primarily in accounting, an area in which Jennifer admits she is weak. With shared ownership, all of Sam's and Jennifer's assets are tied up in Ogilvee.

In recent years, Sam has become very bitter. He no longer enjoys work and is rude to employees, clients, and vendors. Furthermore, Jennifer says, Sam spends much of the day just "hanging around" the office. She worries that Sam is destroying company morale and disrupting her efforts to create a productive work environment. In addition, she is convinced that the company can have only one boss.

Jennifer has asked her father to become chairman of a newly established board of directors. In this position, she believes, he could keep in touch with Ogilvee and contribute to its ongoing success without appearing at the office daily. To make up for her accounting deficiencies, Jennifer proposes finding an experienced professional to serve as the company's chief financial officer.

"But my dad doesn't want to step down," says Jennifer. "He has no interests outside work, no hobbies, and a poor -- third -- marriage. He's resentful that he's being forced out. How am I supposed to effect the needed changes for the best of this business, preserve my dad's dignity, and not destroy our father-daughter relationship?"

Response 1

Develop A Plan

First, let's look at what got us to this point. As is often seen in family-business problems, both Jennifer and Sam have failed to consider the other person's needs and point of view while pushing their own. Second, Jennifer should have considered gaining some third-party support for her position instead of being the lone messenger. Third, Sam has to admit, at least to himself, that he is afraid of the "outside world" and won't move until he feels comfortable with it.

The real questions now are where do we go from here and how do we get there?

Our objective has to be to develop a plan that is good for the company and is acceptable to Jennifer and Sam. They need to sit down together with their advisers to work out this plan. It should define the goals for the company. It also needs to spell out leadership positions clearly and define responsibilities for Jennifer and Sam, as well as job descriptions for other key people.

In my opinion, having one boss gives a business the best opportunity to succeed and promotes employee comfort. Jennifer and Sam should face the facts: Sam is not going to get out, but Jennifer is better at running the company on a daily basis.

An aside to Jennifer: Working out a chairman's position for Sam would let him be involved yet give him time to investigate new interests. The second part of the plan is to help him develop a "second career" and the steps to get there.

An aside to Sam: Lighten up! Tell Jennifer what your real concerns are, and see if there is a way you can work together to alleviate these concerns.

Response 2

Slow The Pace

Sam's fear of stepping down might be resolved if he knew where that step would take him. His relationship with Jennifer might suffer ultimately if some alternative action is not taken to resolve the business conflict. Because of their apparent stalemate, Sam and Jennifer might need to secure third-party consultation to help plan the business transitions at Ogilvee.

Jennifer and Sam should talk about their roles at Ogilvee to clarify what is important to each. The discussion should include Sam's unhappiness and Jennifer's eagerness to take over the company.

Sam is rebelling at the forthcoming change and may feel that he still has a number of productive years remaining with Ogilvee. With no outside interests or apparent friends, Sam has centered his life on Ogilvee. He needs a good reason to get up in the morning.

Because all of his personal assets are tied up in Ogilvee, he may be concerned about the future financial management of the company. Some estate planning would help to secure Sam's future and enable Jennifer to assume the sole leadership role in the company. Jennifer might want to begin the process of buying him out over a period of years.

A beginning dialogue may be developed by getting Sam involved in the hiring of a chief financial officer. Sam could help train the CFO, and as he did so he would likely develop confidence in the CFO's ability to manage Ogilvee's assets. The transitions would be planned to help Sam make changes and adapt at a slower pace.