Developing viable strategies and avoiding pitfalls when transitioning the leadership of family-owned businesses from one generation to the next was the focus of a Feb. 12 session at the International Production & Processing Expo (IPPE) held in Atlanta.
ATLANTA – Doug Clemens, chairman and CEO of the Clemens Family Corp., Hatfield, Pennsylvania, said his job centers on serving as a general helper to the 4,000-plus employees that comprise the family-owned company today.
The corporation is made up of the Clemens Food Group, which generates most of the company’s revenues. Doug Clemens’ great-grandfather started the company in 1895 and he is the fourth generation working in the family’s business, which includes about 330 family shareholders. About 23 family members currently work in the business and a fifth-generation family member recently began working at the company. He pointed out that Craig Edsill, president of the Clemens Family Corp., was attending the session and represents the company’s transition to succession planning with non-family members.
Clemens said his company wasn’t always as organized as it is today in terms of succession planning. Prior to a corporate reorganization in 2000, leadership roles were based on age. “The way it used to be was really simple — The next oldest boy, it was his turn.”
He said after the reorganization, he became president by default. The decision was also made to form a majority outside board, which ultimately developed and required the stakeholders to adopt a very clear and deliberate succession plan, including provisions for immediate succession; a three-to-five-year plan and a long-term plan. The long-term plan includes development plans for preparing the company’s younger employees, which currently includes one family member out of six.
Clemens explained, “We are working through giving future leaders different experiences throughout the organization,” exposing them to operations, sales and marketing roles among others. Until the reorganization, Clemens’ retiring family managers automatically became board members, but that changed with the advent of the outside board appointees who required the succession planning.
“Before it was just next man up, next brother up and that’s how we did it for many, many decades,” he said.
Clemens admitted that transition to the outside board was a source of angst for the family. “There were fractured family relationships through that process,” he said, and it presented many challenges. Clemens added that bringing new family members into the business remains a priority moving into the future. Those who are interested are required to first work outside the company for three to five years before being considered for employment. And even then, he said, “You have to go through the competitive hiring process just like anyone else.”
David Miniat, chairman and CEO of Miniat Holdings, which includes Ed Miniat LLC, South Holland, Illinois, said his company was founded by his great-grandfather who immigrated to the US from Lithuania in 1892 and started the family business by 1900. As a processor specializing in sous vide-cooked meats, Miniat pointed out that succession planning and addressing the inner workings of running a family business for multiple generations is a non-competitive issue. “We share what’s worked, what hasn’t worked, and we help one another out because family businesses are the backbone of our country and particularly of this industry.”
Miniat said when he assumed his current role in 1995, his older brother was part of the organization and, at that time, there was no formal plan for how the torch would be passed to his generation. “It wasn’t easy because I had an older brother who was also interested in that role,” he said. The decision to appoint the younger sibling to the leadership role was made by his father and uncle. “There wasn’t a lot of preparation or planning leading up to it,” he said, “not like there is today.” He said the transition was quite challenging. “It wasn’t smooth,” he said.
Dale Morsefield joined Miniat as a non-family member of the executive team for about three years, after a long career at Nestle where he retired as a senior operations executive. “I represent the non-family managers in the organization,” he said.
The North American Meat Institute (NAMI) is hosting a Family Business Workshop June 25-26 to address some of the challenges facing family-owned meat and poultry companies. The event will be held in Indianapolis, Indiana, and registration information is available at www.meatinstitute.org/events.