35: Succession Stories: Lessons Learned From Former Family Office CEOs

Introduction

Welcome to Let’s Talk Family Enterprise, a podcast that explores the ideas, concepts and models that best serve Family Enterprise Advisors in supporting their clients.

 

All views, information and opinions expressed during this podcast are solely those of the individuals involved and do not necessarily represent those of Family Enterprise Canada.

 

Description

Ruth Steverlynck sits down with Jane Flanagan, author of a recent white paper capturing interviews with over 30 former CEOs of family offices to distil key lessons learned that are applicable across all domains of a family enterprise.

 

Guest bio

Jane Flanagan is a Senior Vice President and serves as Director of Family Office Consulting in the Global Family and Private Investment Offices Practice at Northern Trust Corporation in the U.S. She and her team serve some of the world’s most prominent families to educate them about their options and support them in finding their best way forward.

Jane has been working with and learning from family leaders and family office executives for her entire career. She has interviewed hundreds of families to document best practices in areas such as family communication, strategies to engage rising generations, family office service delivery, compensation, and more.

 

Before joining Northern Trust, Jane was a Managing Director with Family Office Exchange in Chicago for 26 years.

 

You can find out more about Jane Flanagan on Northern Trust Corporation and her LinkedIn.

 

Key Takeaways

[0:26] Ruth Steverlynck, the host, introduces and welcomes Jane Flanagan. The subject for this episode is a Northern Trust whitepaper Jane has released, “Succession Stories: Lessons learned from former family office CEOs.”

 

[2:11] Ruth has shared the whitepaper with a couple of family office CEOs. One said it was one of the best papers they had ever read in the family office space! Today’s episode is important for the family office community.

 

[3:30] Jane learned from Northern Trusts’ 2020 Family Office Benchmarking Survey that nearly two-thirds of the participants said they would soon experience a succession in the family, family office, operating business, or within the trustees. Jane searched for resources to help these leaders to prepare but didn’t find anything written.

 

[4:20] Jane reached out to former family office CEOs to see if they would share their succession stories. Everyone said, Yes! The paper is a result of the generosity of 32 former family office CEOs whom she interviewed. Most of the former CEOs Jane interviewed were non-family member professionals; a few were family member family office CEOs.

 

[5:17] The intention of the whitepaper is to share lessons learned and advice from CEOs who had lived through a succession. Succession is a normal part of every family’s experience but it’s scary to think of life without that trusted person. Many people put off the succession conversation; this paper provides a way to start that conversation.

 

[6:22] Ruth is struck by the usability of the whitepaper. It’s easy to read!

 

[6:59] As Jane interviewed the former CEOs she learned that succession changes the way you see things, especially those of the next generation. One CEO may be replaced by multiple people. It’s more than talent.

 

[9:44] How does a family manage the emotional aspect of a family office CEO succession? “Letting go” is the big challenge. A CEO needs to let go of the office and help the family let go of the CEO. The CEO must take the time to plan for what’s next for themselves, for the board, the staff, and the family.

 

[12:54] The thing CEOs said that made the biggest difference in succession planning was being aware that the departing leader sets the tone for the entire process. CEOs need to show confidence in the team, in the family’s readiness to navigate the transition, and in the future, combined with transparent communication about the plan for the succession process.

 

[13:44] Framing the process from the beginning, acknowledging that it can be bumpy and require a little bit of extra patience from everyone, helps manage the family’s expectations. Jane cites Life Is in the Transitions, by Bruce Feiler, which explores three phases of transitions. It’s helpful to have a transparent communication plan to think through the timing.

 

[16:59] Jane describes how a family office relates to a family business and believes that family office succession principles apply equally to family businesses.

 

[17:51] As an advisor, be ready to welcome the CEO successor with open arms. New leaders bring a fresh perspective and are always looking for ways to add value, especially in their first 90 days or six months.

 

[19:03] The mandate and role of the successor CEO may be very different from those of the incumbent CEO, due to how the family and the business have grown and changed. Of the CEOs interviewed, 58% of them said at the same time there was a generational transition. Successor CEOs may need different skills. The family chooses the successor CEO.

 

[22:08] Jane says we could study this topic for the rest of our lives and never finish! More study is needed on successor CEOs and Trustees. There is a lot of work being done now on preparing the next generation to lead.

 

[24:10] Jane comments on the succession of knowledge, information, and relationships. The CEOs interviewed said they should have taken more time to prepare and done more to communicate with people sooner; you can never start too soon.

 

[25:49] For additional study, Jane suggests the links page at the back of the whitepaper (see link below). One book she particularly recommends is Designing Your Life: How to Build a Well-Lived, Joyful Life, by Bill Burnett and Dave Evans. It’s a good book for anyone from a college graduate to a transitioning CEO.

 

[27:23] Jane’s advice from an advisor to other advisors and her two book recommendations!

 

[30:38] Ruth thanks Jane for joining us and sharing these nuggets from her research!

 

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Mentioned in this episode

The Let’s Talk Family Enterprise podcast is brought to you by Family Enterprise Canada.

“Succession Stories: Lessons learned from former family office CEOs”

Life Is in the Transitions: Mastering Change at Any Age, by Bruce Feiler
Designing Your Life: How to Build a Well-Lived, Joyful Life, by Bill Burnett and Dave Evans

Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask, by Tom McCullough and Keith Whitaker

 

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