While few family-owned
companies survive
past the first or second generation, Schantz Organ Co.
Inc. is laying out plans for the
fifth generation to take control.
President Victor Schantz is
the fourth generation family
member running the 134-year-old, Orrville-based business
that builds pipe organs for
churches. And after his
father, Bruce Victor Schantz,
died in January 2007, Schantz
reorganized and expanded
the company’s board of directors to better represent various family groups and began
the succession planning
process for the company’s
fifth generation.
In succession planning,
Schantz says that first you
must consider all possible
options for the future, ranging
from family members or management staff taking over the
business to selling to someone
outside the company. Then
you have to zero in on what’s
best for the company.
For Schantz Organ, that
means the fifth generation has
committed to keeping the
company in the family and
that everyone recognizes that
a portion of the family’s capital
must stay in the business in
order to keep the company
moving forward.
Once that’s determined,
implementing a succession
plan and getting buy-in
requires constant communication, Schantz says.
“It’s a constant working over
many years at keeping the
family from becoming fractured, maintaining good relations, being honest and open,
and having a value set that
drives the organization in terms of ethical dealings,
openness and sharing of information,” he says.
Keep communication honest
and open by sharing the company’s succession history, laying out common interests, getting the board to commit to
making succession planning a
priority so it does not drag on
and reinforcing the need for
succession planning and working on it at the right time for
the company.
“There must be time spent
bringing them up to speed so
they see that the process is
fair and equitable,” Schantz
says.
Make sure you get everyone’s input into the process.
“It’s management by walking
around,” Schantz says. “If the
families are in various parts of
the country, find ways to visit
them and talk periodically.
Talk and gauge their needs
and wishes and try to be sensitive to that. It’s the same with
employees.”
Using a neutral adviser can
be helpful in the process.
“We felt that previous experience in succession work and a
solid knowledge of finance
and accounting was important,
along with resources and contacts from the legal side,”
Schantz says. “And then a personality that can listen, keep
us on task and direct things
toward a conclusion.”
You need to be actively
involved in the process and
believe in it so that others
will buy in to it.
“The leader has to be proactive,” Schantz says. “After all,
he or she is the one who is
going to have to change his or
her career path, in the sense
that he or she is getting out of
the way and mentoring the
next generation. It’s an emotional thing. Not everybody
wants to give up the reins or
face that question.”
Things may change during
succession planning — new
business partners might come
forth, or the person you wanted to pass the company on to
may not be interested. Schantz
says it’s important to be flexible and to not come into the
process with a preconceived
agenda.
Planning your company’s
future and starting to do so
early with a commitment to
the process will help smooth
the transition, Schantz says.
“We’ve succeeded at that
four times,” he says. “In any
business, that’s almost unheard of, but it isn’t going to
happen in the future without
planning.”
HOW TO REACH: Schantz Organ Co. Inc., (800) 416-7426 or www.schantzorgan.com
Successful succession planning
Succession planning should
start on day one of a business,
says Bruce Hendryx, director of
succession planning at the private client group for National
City Bank.
“Most people get into business and dedicate themselves to
that single thing,” he says. “As
time goes on, they start to think,
‘How do I bring somebody in
who will take this over? Or get
my family involved?’”
Hendryx says you need to prepare for a role change as the
plan unfolds, which can be
tough. To ease the transition, an
owner may want to take some
time away from the business.
“It’s finding things they’re
already doing,” he says. “Maybe
they want to spend a few
months away, so we tell them to
do management from afar and
see how the company runs.”
And while you’re taking care of
the future of the business, don’t
forget to take care of your own
future, as well.
“We’ll run a financial plan … to
say, ‘If I get this much money in
what I already have, here’s what I
can do over time to live, then factor in things to make sure what
we’re talking about on the succession side will roll into their
personal life,” Hendryx says.
Once the plan is done, don’t
just put it on the shelf and forget
about it. You’ll need to review
and update it periodically to
accommodate any changes that
may occur.
“Keep it fresh and look over
what you’re doing to make sure
it still applies,” Hendryx says.
HOW TO REACH: National City Bank,
(216) 222-8933 or www.nationalcity.com