Clarity and My Own Transition
October 24, 2011 by Harvey Wigder · 4 Comments
I am going to share a bit about my own transition from a home in Newton (that we sold two years ago) to my new digs in Worton, Maryland. The picture shows a view from my new deck. Although I will continue to spend much of my working life in Boston, the Maryland address will be my primary residence.
Twenty eight years ago, when we lived in Philadelphia, we enjoyed a second home in Maryland on the Eastern Shore of the Chesapeake Bay. About four years ago, my wife Kathy and I decided we wanted to go back to the Bay. I have been in the Boston area for 28 years and although I will always feel part Bostonian, I was ready for a change and this adventure.
Once we changed our family dialogue from should we move to actually selecting a target date (it was October 2011), the problem definition changed dramatically for us. Since I have no desire to retire, my really big question was how I could move without damaging my business. My specific questions were (1) how do I maintain business in Boston; (2) how do I build a network and become known in this new territory; and (3) should I change my business model to accommodate these changes? I had two years to find answers to these questions.
Although I will briefly describe some of the decisions and changes I made, my main point is more existential. I believe I have worked through the issues and arrived at good answers to my questions. For this, I give the most credit to the fact that I stopped and consciously asked them in the first place. In my view, and from my experience, something magical happens when we identify and clarify our goals: life’s energy and gravity works in a mysterious way to help us fit problems and opportunities together.
The opportunities I discovered include:
- Refining my executive search model to make it more unique and less bound to New England.
- Seeing that the Exit Planning Exchange was seeking to expand to Philadelphia, helping to launch the chapter. I am now its President.
- I also have been active in the Mid-Atlantic Chapter of the Family Firm Institute. This gives me presence in Philadelphia, a major city near my new home.
- Seeing Personal Transition Planning as something that could help make my search practice unique, getting trained to deliver the service, and then integrating it into my practice and launching it as a separate element within my business framework.
- Changing the name of my company from Fulcrum Search to Fulcrum Transitions (with the corresponding tag line: Better Lives, Better Businesses), to reflect the new excitement I feel about my business future.
I approach my transition with some fear that it might not work as well as I hope it will, but also with great excitement and careful optimism. I hope to help others making transitions feel the same way in my new career as a transitions coach.
I am happy not to be saying goodbye to my Boston friends and look forward to continuing to work with you all as I develop new friends in Maryland. Feel free to call me if you would like to talk. Starting Friday, the number will be 877-694-1855
What Is The Missing Ingredient In “Traditional” Exit Planning.
September 30, 2011 by Harvey Wigder · Leave a Comment
In this newsletter the word “exit” refers to an owner leaving his or her business via sale, transfer or liquidation.
The first baby boomers have passed the traditional 65 year retirement age and every year, that number will increase. This will impact the economy because it is estimated that this age quadrant owns about 8 million businesses. This is an important time for making some key decisions in the life of a business owner, especially since it is estimated that 80% of his or her wealth is tied up in the business. Since a business is not a liquid investment, it must be sold for the owner to realize its value.
There are two problems with exits. The first is that the owner has spent his life operating the business and usually doesn’t have the skills to sell it. What generally seems to happen is that the owner has a crisis or 
gets fed up and seeks an immediate sale. Since owners often have unrealistic notions of the value of the business and have not done anything to prepare it for sale, selling the business can be very problematic. One statistic that shows the result of that lack of expertise is that 78% of businesses presented to M&A firms do not find a buyer and are subsequently liquidated. Many others find buyers, but don’t maximize the selling price. These transitions are not good for the owner, his or her family, employees, or customers; it also represents a loss of jobs and value added for the economy.
Advisors who understand that most owners do not have the skills to sell their businesses have begun to focus on the idea that bigger picture exit thinking needs to be coupled with their specific professional expertise. Many money managers, M&A firms, lawyers, accountants and business consultants are realizing that each situation has its own complexity and it will take a team of specialists (legal, tax, accounting, and others), plugged into the needs of the owner, to help guide that person to a successful exit. These advisors help the owner understand the process and form the team needed for success. And in this case, the term success is defined as the completion of a transaction wherein the owner is able to monetize his or her investment to the greatest financial benefit possible, while at the same time ensuring employees, customers, vendors, and the buyer are also benefited.
Thus, the initial approach to the realization that “exits” would become increasingly prevalent was financial. The questions most often posed to owners were “how much money do you need to fund the life you would like when you no longer have cash flow from the business?”, and “what is your business worth – assuming you can sell it?” If the business was worth more than his or her needs, the owner could sell it and was encouraged to create a plan around value maximization. If the business was worth less, the challenge was to create a plan that included steps to increase the businesses value (and its likelihood of sale). However, these insights often don’t necessarily lead to action. Why? What is the missing component?
The missing ingredient is emotional readiness. Although I have heard there are owners who want to retire, I don’t know them. The ones I know have their identities and lives so wrapped in running their companies that they do not have a clue about what they might do with their lives if they didn’t have the business to go to. Instead, they ask themselves, “if I sell my business on Friday, what do I do Monday morning?” When they contemplate the prospect of not actually not “going to work” at the business, they figuratively (and sometimes literally) grow cold and clammy because they feel that without the business, they would drop into a black hole that feels somewhat like a walking death. In a sense, the business is their life and without the business, life seems pretty empty.
Understanding the emotional component has led to the next generation of exit planning, more properly called transition planning. With this focus, the owner considers his or her (and often the spouse is included) emotional readiness early in the process. If an owner can get excited about the prospects of an interesting and meaningful life after leaving the business, they are motivated to proceed. Otherwise, they nearly always put off needed planning; avoid the subject altogether, or (unconsciously) sabotage planning and selling efforts because of this lack of emotional readiness to move into another phase of life. This emotional component of the situation has many variables – and they differ from person to person. The point here is that those variables should be carefully examined, planned for, and resolved as part of the transition process.
I have gone through my own transition planning which I will discuss in the next newsletter. During my planning I discovered the Successful Personal Planning Institute which has created a systematic, business oriented process to help owners deal with emotional issues. I have been certified by them to use their process and am now working with business owners to help plan and effect a successful emotional and financial transition from their business to a new and equally fulfilling life. We will continue on this topic in the next newsletter.
Heidrick & Struggles Opens Its Kimono
July 29, 2010 by Harvey Wigder · Leave a Comment
In a recent article in the Financial Times, the new CEO of Heidrick & Struggles, one of the nation’s leading executive search firms, tells about changes resulting from a recent internal study of the results of 20,000 searches.
“We’ve found that 40 per cent of executives hired at the senior level are pushed out, fail or quit within 18 months.”
Some industry observers who saw that quote used it to bash the firm. For example, Staffing Advisor says “Astonishing. He’s describing a 40% failure rate by one of the most trusted and reputable brands in the executive search business. (If that statistic is true, I’m glad they didn’t build my house or service the breaks on my car.)”
Staffing Advisor was being disingenuous because they know that Kelly is only admitting what other observers have known for years. It is hard to find and integrate executives into a new company. Failure rates are high and the reason is cultural fit, not skills.
Kelly is a young CEO who earned his recent promotion because of his successes building revenue in the Heidrick regions he managed. He is using this research as a basis for introducing new services and income streams to the company. To continue quoting the Financial Times article: “The firm now offers companies everything from initial training and early feedback for their new recruits to regular assessments of current executives and succession planning and staff development programs.” The article then quotes a killer analogy. “Mr. Kelly likens the services to the work of an organ transplant team, which not only locate and attaches the new heart or liver but also follows up with the patient to make sure the transplant is not rejected. Such “leadership and advisory services” now account for 10 per cent of Heidrick’s revenue. Mr. Kelly hopes to push that number to 40 per cent over the next five years….”
I am sure these new services will be attractive to the Fortune 1000 firms who are most apt to use the services of Heidrick & Struggles and the other big brand search firms. This is the CYA mentality immortalized in the phrase, “You can’t go wrong with IBM!”
If Heidrick and the other big search firms had the courage to take a deeper look, they might take a Deming approach and consider the failure rate as having something to do with their processes and business model and tackle the question: What can we do to improve our processes?
At Fulcrum, we have recognized the problems in the big-company search model for years. We improved our processes several years ago and we provide a 100% satisfaction guarantee. We are happy to see that a giant like Heidrick and Struggles is beginning to get it, and is offering (for an additional fee) many of the services we already provide as part of our stand search package.
If you go to Heidrick’s website, you will see the array of services they offer and learn about the many experts who provide them. On the other hand, if you go to the Fulcrum web site, you will see a simple promise: a guarantee that we will get it right. Let the clients decide which firm gets it right.
What Will Happen When the Recruiter Calls
April 26, 2010 by Harvey Wigder · Leave a Comment
I just completed two searches that I’d like to share with you. The companies that I “stole executives” from made it so easy for me. My message to you is this: plan ahead, take steps to retain your key employees, and “go on the offense” to prevent people like me from easily stealing your people.
The first search was completed for Tom, who owns a profitable $8 million dollar manufacturing business. When we first started talking about finding someone to be GM of his company, Bob was dubious. “Why,” he wanted to know, “would someone from a bigger, more sophisticated company, want to come into a small basic manufacturing company like this?”
I knew that someone would be delighted to take the job Tom was offering. The most important reason had to do with Tom himself. Tom is direct, honest, and open. His employees seem to like working in his company. Although Tom didn’t see this as special, I knew that he was undervaluing a big asset. I was also very confident that the business had good growth potential and that candidates would welcome the opportunity to make a contribution.
After I spoke to Larry, I knew he had all the skills for the job. His personal values included having respect for others, and personal integrity. The company he was working for had asked him to turnaround a failing plant. As part of that process he negotiated stretch performance goals with the people who were directly responsible for implementing changes. Everyone worked together and the goals were dramatically exceeded. Yet, when it was time to pay the promised incentives, the CEO refused, arbitrarily. That CEO didn’t understand why this might be short sighted and poor leadership.
I met Larry shortly after that incident and he was very ready to accept my recruiting call. Needless to say, I had no problem showing him a greener pasture.
In my an early Ezine (Wigder Reports, same title), I talked about a client who had the courage to search for a new Sales Manager, even though the one who was being replaced had performed adequately. Ralph, who had great success with a larger competitor, loves being in sales and sales management. However, he was just completing his third year in a marketing job and was itching to get back to sales.
Ralph took my recruiting call after he had completed fruitless discussions with his superiors about getting back into sales management. He was easy to recruit as well.
What do you want your employees to say if/when a recruiter calls? How can you be sure that your people will say no when the recruiter calls? Here are some valuable tips to ensure that key employees are retained, happy, and resistant to the tempting calls of the recruiting sirens:
• If you do not want them to welcome a call from a recruiter start now, before it is too late. The first ..step is to start by paying attention to their goals and values. You will not keep good people if you are ..not creating an environment where they can obtain the rewards that are most important to them.
• Start talking to them about their feelings about working for your company. Although the answer might ..stretch you to go outside your current assumptions, paying attention will make you less vulnerable. ..The questions to ask might include–What changes might further our mutual goals? How satisfied are ..you with your job at this time? Are we satisfying your career goals?
• Ensure that your key employees are truly valued, and have a fair compensation plan in place. Be sure ..you know what motivates them, and respect their personal goals and aspirations. You can’t have loyal ..employees until you have happy employees first. Put yourself in their shoes once in a while.
Sharing this sage advice could make my job more challenging, but I’m confident that there will always be a good pool of business owners and CEOs who continuously neglect their people. Of course, I hope you will heed this advice because I honestly do wish you success in building your team. Any CEO worth his or her salt is never surprised when a key employee leaves. There is usually an underlying issue that nobody wants to address.
When it comes to preserving their current team, I encourage my clients to do it themselves or use my help in this dialogue with employees, and understanding the meaning of the answers. The owners who find a solution keep their best people because they constantly are finding new ways to grow together.
Who knows… I may be calling your company soon. Have the receptionist put me through!