Efraim and Shlomo, two brothers in their 70’S, built their business empire from scratch and managed it as Co-CEOs for 40 years. At some point, Efraim declared he didn’t want to be involved anymore in daily management.
Consequently, Yossi, Efraim’s son, and Oded, Shlomo’s son, who so far fulfilled low-level operative roles in the firm, such as dealing with suppliers, and mainly followed their fathers’ orders, expressed their wish to take over the firm’s management. However, the sons quickly realized that in practice, the first generation is not yet ready to hand over its management powers. Eager to solve the crisis, Yossi and Oded asked me to assist them in carrying out an intergenerational transmission in the family firm.
Identifying needs: First, I became acquainted with the main figures operating in the firm, with the nature of their relations, with the firm’s organizational structure, and with its activity and business strategy. After a thorough learning process, I identified a few underlying challenges standing in the way to a smooth intergenerational transmission. The founders’ unwillingness to step aside was actually just one part of a much more complex picture.
On the one hand, it appeared that indeed, the founders had already exhausted their managerial energies, at least as fully active CEOs. At the same time, they were reluctant to let go and so kept running the firm on a daily basis, just as before.
On the other hand, Yossi and Oded, the members of the second generation, although eager already to take over the reins, were actually inexperienced as managers.
And then there was another issue: Over the years, no mid-level managers had been appointed in the firm, and no workers had been chosen and trained to operate as managers and assist the CEOs in fulfilling their duties.
Tailoring solutions: I realized the only way to convince the founders to step aside was to offer them a position, which enables them to stay involved in firm’s matters and also validates their unique and distinguished status as the firm’s founding fathers and as heads of the family.
Accordingly, I suggested to establish a board of directors in the firm and to appoint Efraim and Shlomo as directors. As such, they would be responsible for supervising the firm’s activity and would also take part in strategic decision making.
In addition, I suggested to form a new organizational structure, led by Yossi and Oded as Co-CEOs, who together would be in charge of a team of deputy CEOs, recruited from outside, according to professional standards.
Finally, I recommended that the new CEOs go through an apprenticeship process, accompanied for a while by myself and other experts, who would assist them to utilize their management skills and to carry out certain crucial tasks yet unfamiliar to them, such as budget planning and creating a business plan. Alongside, I suggested the founders undergo a training process to better understand their new role as directors.
The process: During my intense meetings with the founding brothers and their sons, I managed to gain their trust and their acknowledgement in me as a professional and unbiased strategic consultant, who regards the firm’s interests as top priority.
The trust established between my clients and me and the positive atmosphere of our meetings, increased their openness and attentiveness to my recommendations.
Through continuous dialogue, we manged to agree upon a new and sustainable structure of governance in the firm, composed of a board of directors and a new management chain.
The founders, Shlomo and Efraim, were appointed as directors, while the sons, Yossi and Oded, were appointed as Co-CEOs. I assisted the new CEOs to create an optimal division of labour between them, such that enables each of them to focus on the areas and tasks more adequate with his skills and preferences. At the same time, I encouraged them to adopt working patterns, which ensure they operate in coordination and cooperation.
For a few months, the sons were accompanied by relevant external experts, who assisted them in making their first steps at the new job and exposed them to updated data concerning the market in which they operate.
In addition, we established a new organizational structure, which includes a sales managing director and a purchasing manager recruited from outside, to allow the new CEOs to focus on macro-level management.
