The processes and considerations when handing a business down.
Succession planning can involve families pulling together to secure a business’ future or looking outside the company to fine suitable talent with the necessary skills and vision. Arta Ertekin quizzes retailers and industry leaders about the process.
They say blood is thicker than water and when it comes to the history of the jewellery industry and its tradition of family-run firms, this saying does not go unfounded.
For retailers in particular, the movement of the business down the family chain can be simply assumed, with sons and daughters eventually taking over their parents’ business for good. But in this modern era – with its opportunities of global travel, study and employment – being able to rely on your loved-ones is not as simple as it once was.
As research by the Family Business Institute shows, even when 88% of current family business owners believe the same family or families will control their business in five years’ time, only 30% of family firms survive into the second generation.
And for those that do, questions will be raised. How does a new generation guarantee efficient management plans? How do they keep the power of a retailer or brand’s name? And most importantly, are management and strategic business skills hereditary characteristics?
To answer, when it comes to succession it is rarely a straightforward handover. There will, in almost all cases, be an emphasised need for retraining or new skills to be acquired, whether bookkeeping, buying, or overall business management.
In situations where family does not step up to the plate, then companies can look at exploring the skills of existing employees as potential successors, especially when the only alternative choice is to sell the business.
A STRATEGIC EVENT
Some of the most valued roles in the UK jewellery industry can be some of the hardest to fill, with time and effort taken to make sure potential candidates are at the top of their game. When it came to sourcing a new chief executive and assay master for the Birmingham Assay Office, the task became – in the words of current chief executive Michael Allchin – a “strategic event”. Having announced his plan to retire this year, Allchin worked with the Assay Office to set up a recruitment committee consisting of the chairman of the Wardens, two Wardens and himself.
“We consciously set out to keep the appointment process simple and uncomplicated,” Allchin explains. “The first job was to think hard, discuss, and write down a specification for the position and for the person we were looking for. This included personal attributes, experience and knowledge. Then three different routes were taken in order to attract suitable candidates, [raising awareness] through our own PR, social media and online advertising.”
The role was eventually handed to former joint managing director of Heimerle + Meule Group (formerly Cooksons) Stella Layton, who joined the company on January 1 2014 to shadow Allchin for several months. Layton is the thirteenth Assay Master to be appointed since the office was established in 1773, meaning only twelve people have held the role in the past 240 years, for an average of 20 years each.
For family business Laings of Glasgow, the process of succession was closer to home. Stuart Laing, the founding director of the company and chief executive of the Houlden Group, has steadily handed the business over to his daughter Wendy Laing and her husband Joe Walsh.
“I never suggested in the early days that any of my family consider the jewellery industry, so all three [of my children] sought out alternative careers,” Stuart Laing explains. “I am glad to say that they were all successful in their chosen field, however as I was nearing the time when my personal planning was on the menu, I contacted each of my children and asked them to revisit the question again.”
Wendy Laing had spent several successful years with LVMH and her husband Joe was an accountant with much experience in corporate finance and owner-managed businesses. Laing felt that they were ready for the challenge.
Joining the company meant that the family’s roles and responsibilities shifted, changing the dynamic of the business. For families such as the Laings, one of the biggest challenges of succession planning is ensuring the rest of the industry believes the current owner’s progeny are as good. Says Wendy Laing of taking over the retail business: “The main hurdle we have come across is proving to all that we have the skills to succeed the business. Nowadays there are a lot more stakeholders alongside the family, such as the major brands and the bank. All parties have to be comfortable with succession.”
Often, there is also a need to secure the senior generation financially so that their future is not dependent on the business. “This can be difficult to do as a lot of their wealth is tied up in it,” Laing adds. “If Joe and I had not joined the business, then succession planning would have been a lot harder than what we are currently doing, and a sale would have been the only other option.”
A NATURAL PROGRESSION
For other firm , succession comes about suddenly. At family-run retailer Winsor Bishop, managing director Sophie Fulford recalls the process of succession after her father Robert Croyden fell ill. “We didn’t have a natural progression in place at all,” she states. “Although my sister had been working with Asprey in New York, there were no discussions regarding either of us coming into the business until we found out that our father was seriously ill.”
Croyden hired a management consultant who specialised in family business succession planning, and together they embarked upon a plan. “My sister at that time was pregnant with her first child and so the time wasn’t right for her to be taking over a business,” Fulford says. “I was working in London with an advertising agency and, having been there for six years, took the conversations regarding the future potential of our family business very seriously. Once we had agreed the training and development plan, I packed up in London and headed to Norfolk.”
Sometimes the transition of succession can be fast, as was the case for Continental Jewellery UK general manager Peter Mooney, who stepped into his father shoes after he passed away quite suddenly.
“My father became ill very quickly and passed away within three months of diagnosis, so the last part of my succession was not planned,” says Mooney. “I graduated from university in 2002 and my father asked me to join the business. Even though he ran the UK office of a large Chinese company, the fact he was employing his son wasn’t a problem for the owners because the Chinese are all for family succession and think the loyalty and continuity is very important for a smooth transition between generations.”
After seven years of growth at Continental, dealing with all aspects of the business including accounts and manufacturing, Mooney took on the role of general manager in 2013, driving the business to exhibit at UK jewellery trade shows, something it had rarely done previously.
When it comes to succession, intensive training and total immersion in the daily duties of a new role can be the most beneficial method for ensuring a smooth transition. Wendy Laing explains that the beginning of her succession was very much focused on “getting to grips with and understanding the luxury watch and jewellery market”. Listening and taking guidance from her father Stuart and drawing on his knowledge and experiences has stood her in firm stead today. Their roles have been gradually defined and she is now in charge of sales and marketing while Walsh has been appointed Laings of Glasgow managing director.
Twelve months of training at the Gemmological Institute of America (GIA) and working within another independent jeweller gave Fulford a solid grounding for fine jewellery and watch retail. “My father very quickly stepped back, so my workload and learning curve was at its maximum pretty much from day one,” she recalls. “The positive of the situation was that my father was always there to discuss issues with and to guide me, but it was very much up to me to design the path for the business whilst getting a quiet nod or head shake in the background from my father. He always told me I had to learn by making my own decisions and mistakes.”
According to Allchin, the earlier a successor hits the ground, the better. “Stella started with us on our first day back in the New Year,” he explains. “We have agreed an induction plan to cover her first three months in the office, giving her time to shadow me, get to know our customers, our staff and the Assay Office’s processes.”
Allchin believes such an introduction is very important. “Because although Stella is more than capable of taking control right now, it gives her the time to get to learn and become involved in all kinds of matters that she would otherwise have to bypass and come back to at a later date.”
Layton will assume control of the Birmingham Assay Office at the start of April 2014, by which time Allchin says: “I’m sure she will be more than ready to wave me off and bring in a new era for the Birmingham Assay Office. She’s a local Black Country girl and the first female Assay Master; we are pleased and proud to have her here as our brand new, shiny chief executive.”
Even when a handover is straightforward or comes about through necessity, it should always be borne in mind that whoever is chosen will determine the future of the company; time should be taken where possible.
As Allchin explains: “Getting it wrong was not an option, nor was it a race. It might have been a time-consuming process, but it was worth the effort.”
Outgoing chief executives often act, where they can, as mentors of the company following their departure. They are essential consultative bodies that will help the successors they have selected to fulfil a position full of high responsibilities and ensure, ultimately, positive continuity of the business for many years.
This feature was taken from the February issue of Professional Jeweller. To read the issue in full online, click here.