Though you wouldn't guess it today, Rug Bug was just a small-town carpet cleaning company when Constance Brown (58) and her husband Bob (62) bought it from Bob's father in the early 1970s. From that meager start, Rug Bug has become the largest cleaning and carpet restoration business in the region.
Constance and Bob are proud workaholics and expect no less from their employees, including four of their adult children. Constance is the active partner since Bob retired from day-to-day operations 18 months ago to focus on community work and managing the dozen or so real estate ventures they own. He also runs the charitable foundation they established to keep the company name in the public eye and pursue the couple's philanthropic values. The couple's total assets are over US$100 million.
Constance calls herself QOE – Queen of Everything – and appears to be right. She is the face of the company to its most important customers, the insurance companies. She directs the management team, holds the family together, and occasionally worries that the business and family would fall apart without her. Both family and non-family employees feel the same.
Constance is tired and wants to turn over the reins by 2006 but doesn't know who can handle it. Ranging in age from 28 to 40, four of the Brown's five children work for them though not in management positions. Three of the siblings are from Bob's first marriage, one is from Constance's first, and the youngest is the product of Bob and Constance's marriage.
If it weren't for Christmas and Thanksgiving the Brown's children would see each other only at work. It's not a 'shooting war', but there is a long history of distrust and hurt feelings. Chuck, the eldest and only sibling with a college degree, is a minister in a church three thousand miles away. All have been given generous gifts over the past 15 years and those working in the business receive healthy salaries. Unfortunately, none inherited their parent's money management skills and each strain under huge credit card debts. This is of enormous concern to Constance and Bob, who have valued and practiced fiscal prudence their entire lives.
The Browns want the business to stay in the family but have no succession plan. Their estate plan names Chuck trustee of all their assets, which are to be divided equally between the five siblings.
Bob hopes his second son, Russ, will eventually succeed Constance but Constance doesn't see how. Russ' siblings and Rug Bug's managers see him as immature, irresponsible, and an emotional loose cannon, an opinion Constance shares. The company's managers all came up through the ranks and none have a formal management education. Despite the company's growth and success, Constance has a dim view of her own management skills.
How can the Browns solve their succession crisis?
Workaholics often forget about their families. This exclusive focus on their work has great consequences to their business and their family.
Although Bob is not working directly on Rug Bug it does not mean that he is not working for the business and, more importantly, for the whole patrimony. He shouldn't be left out of the decision-making in the succession plan.
Constance seems to be hooked in the role of 'queen', and is forgetting her other responsibilities as a mother and leader of the organisation. She is obviously not holding the family together, even if she thinks she is – otherwise she wouldn't be worried about the family falling apart without her.
The children haven't been brought up to be mature and financially responsible adults. Fiscal prudence does not pass on to children through osmosis – they need to be educated.
Both Bob and Constance need to assess every child for their capabilities. Also, they need to make sure they have a strong organisational structure – it may be that they only need a leader for follow-up and public relations.
They need to try to implement family meetings, so the family can receive information on the business and stronger family ties can be encouraged. By bringing everyone to the table, including Chuck, and constructing a family protocol, the family could then work together as a team and prepare itself for succession.
These family meetings should be an opportunity for individuals to work through any trust issues or air any past misunderstandings. Hopefully, this would help them become more aware of their own capabilities and personalities, and promote maturity, responsibility and acceptance among all family members.
Bob and Constance have to start looking for a successor among their children and bear in mind that if none have the right capabilities, then they need to start looking for a successor outside the family. This needs to be thought about as a matter of urgency since, if they are forced to find someone from outside the family, they will have to allow enough time for training and building up trust before passing the baton.
Sergio Garza is a Mexican family business consultant with eight years experience and founder of Optima Negocios Familiares, a firm with family therapists and organisational consultants.
Constance is really the only person who can move things in the right direction for both the family and the business. Education is the key to the survival of this family and this family business.
Constance's all-powerful personality has cast a very long shadow over the family and business – a shadow that has virtually paralysed both family members and employees. As the Queen of Everything, Constance is mother to the Princes of Nothing and employer to a gaggle of royal courtiers. It is not surprising that the four children who work in the business are unmotivated and generally inept, or that the employees are discouraged from taking any form of responsibility. If Constance is sincere about retiring, she needs to proactively educate and empower both her children and her employees – then she can take a step back and relinquish control.
None of the children has either the aptitude or motivation to lead the company, and the current managers have no leadership experience. Rug Bug needs to develop a management team that can assume the responsibilities that Constance now holds. Professional training and development for qualified personnel would provide the company with a functional internal structure. An obvious successor may emerge during this process; if not, the family will need to hire a CEO from outside the company.
The only emotional attachment the children have to Rug Bug is as a source of income. Bob and Constance's plan to name Chuck as trustee of the estate and to divide the ownership equally between the five siblings is sure to exacerbate the in-fighting among the heirs. The estate should be administered by an outside trustee so that Chuck does not become the target of his siblings' deep-rooted bitterness. An option may be to sell the company. This would be a wrenching decision for Constance, but could provide the most positive solution for both the heirs and the company itself.
And finally, this is a family that needs education on how to act like a family together. It may be too late for the siblings to develop warm relationships, but they can certainly learn how to co-exist together. A series of professionally facilitated family meetings would be an excellent way to initiate this process and to introduce educational resources to address the lack of financial knowledge and developmental skills of the children.
Jane Zalman is the founder and principal of Zalman Family Business Solutions, a consulting firm based in New York that focuses on the particular issues facing family-owned businesses.