Categories
Business

Gary Miller: When should you fire your kid from the family business? – The Denver Post

John Marce had dreamed that Alex, his son, would take over the family business someday. John was the second generation of business ownership since his father had founded the company 47 years earlier — Marce Distribution Co.

It had a large presence throughout the Midwest. Clients included wholesalers, retailers, Amazon and other online channels generating over $30 million a year in revenues and pre-tax earnings of $550,000 per year. The company had an excellent reputation, low employee turnover and a “family” culture environment. Each year’s growth goals were met for the past 10 years.

When Alex graduated from college, John put him in a managerial role almost immediately. Alex had a strong personality and had always demonstrated leadership skills while growing up. Alex’s first assignment was managing the warehouse logistics and the supply chain of the firm.

Things started off fine, but soon it became clear to other managers that Alex had little affinity for the business. He appeared uninterested in filling and shipping orders accurately and on time. Vendor relationships began to deteriorate. Employees soon became discouraged and resented Alex’s presence.

Alex treated warehouse employees with disrespect — displaying a condescending attitude toward them. As a result, productivity and morale declined. John begin to realize that he had a bigger problem as longtime trusted employees were handing in their resignations.

As time went on, revenues began to decline, and customer complaints began to increase. Soon John received calls from customers complaining that they had not received their shipments on time or that their orders were improperly packaged, or short of the merchandize they had ordered.

John investigated the situation. The employees unloaded on him about all of the problems that his son was creating. They told John that his son was abrasive, abusive, arrogant and downright mean to them.

John now realized that the rise in employee resignations and customer complaints were because of his son’s personality and lack of management experience. However, John ignored the red flags and created a new department. He assigned Alex to develop and launch new product lines. But, one initiative after another failed. The sales department complained bitterly that Alex refused to listen to their feedback and advice. They told John they could not sell the new products as designed. Customers would not buy them.

As time went on, revenues and profits continued to fall. Disappointed, John reluctantly realized that Alex was not a good fit and would not be capable of leading the company in the future. If he kept Alex on, he could very well damage the company beyond repair. There was simply no place for him in the company.

Questions looming in John’s mind were: “Can I really fire my only son?” John kept asking himself, “What will this do to the family? How will it affect Alex’s and my relationship?

The fact is there is no easy way to fire your children. According to Harvard Business Review, “The consequences of firing your children are life long … no matter how well it is done.”

So, here are some recommendations to help you survive one of the most difficult times in your life both personally and professionally.

  1. Sit down and have a heart-to-heart discussion with your child just as you would with any other employee.
  2. Treat you son/daughter with the same respect that you would treat any other employee.
  3. Keep your demeanor low-key, but firm, and nonaccusatory.
  4. Don’t downplay the seriousness of the situation.
  5. Be objective and show him/her the data and the financial performance.
  6. Compare the financial performance to the expectations that they had agreed upon.
  7. Elicit his/her reactions to the problems being discussed.
  8. Provide an exit plan for your child.

John would not be in this position if he had asked himself the following questions as put forth by the Harvard Business Review:

  1. “Are expectations clear and mutually agreed upon?”
  2. “Are you unintentionally setting up your child to fail with amorphous or unrealistic expectations.”
  3. “Are you clearly defining his/her roles?”
  4. “Does your child have the right experience and skill sets to be successful”?
  5. “Is your child being held to the same standards as other employees”?
  6. “Are there clear metrics to hold him/her accountable”?
  7. “Is your child in the right role?”

If there was any doubt in John’s mind about the answers to the questions, he should seek a trusted third-party adviser such as a board member, a close business friend, or a business consultant for an independent assessment. If he had a close relationships to any of those resources, he could ask one of them to mentor Alex.

In John’s case, he didn’t hire his son based on skill sets needed for success. He had no succession plan in place. He didn’t analyze the cultural fit requirements for his business. He just hired him because he was his son.

According to The Family Firm Institute, only about 30% of family businesses survive into the second generation, 12% are viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond.

Some family businesses simply have a life cycle that will not go on forever.

Gary Miller is CEO of GEM Strategy Management, Inc., a M&A advisory firm advising small and medium sized businesses throughout the U.S. He represents business owners throughout the transaction process from preparing them to go to market, selling their companies, acquiring companies and raising capital. He has been a frequent keynote speaker at conferences and workshops on mergers and acquisitions. Reach Gary at 303.409.7740 or [email protected]

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Categories
Politics

The Spot: What did you just do, Colorado, and what comes next?

For people, policy and Colorado politics

What’s The Spot? You’re reading an installment of our weekly politics newsletter. Sign up here to get it delivered straight in your inbox.

Phew. That was an election for the ages, amiright? 

In addition to recuperating, The Denver Post’s politics team has been delving into the election maps to find the patterns and messages in how Colorado voted. 

Given the midterm election results, it wasn’t a surprise to see a jump in support for the Democratic presidential candidate in 2020. However, Jon Murray had some interesting findings about just where the state tilted more toward Joe Biden, and by how much. 

Alex Burness, meanwhile, attempted to unravel voters’ intent in passing a big new government program (paid family and medical leave) and an income tax cut and a Gallagher repeal and an initiative requiring ballot measures to create new taxes. Colorado, you’re crazy. 

We’ve also been answering the question “what next” a lot — as in, what’s next for wolves after voters narrowly supported their statewide reintroduction, and what’s next for Denver pit bull owners after city voters repealed the breed ban. We’ve looked at what kind of senator Colorado’s John Hickenlooper will be, and you can read on to find out from city reporter Conrad Swanson when those new Denver sales taxes will hit your pocketbook.

The coming weeks will also begin to shed light on what’s next at the Colorado Capitol. Even though the election didn’t make a lot of obvious changes there, with Democrats adding just one seat in the Senate and maintaining their big margin in the House, people are more than just numbers and can therefore be unpredictable. Alex has an example of that below.

What else do you want to know about the election results? Submit it here and it’ll go straight to The Denver Post politics team.

To support the important journalism we do, you can become a Denver Post subscriber here.

Top Line

A Denver company that supplies voting machines across the United States pushed back Thursday against claims — shared without evidence — from President Donald Trump that millions of votes in his favor had been deleted.

Capitol Diary • By Alex Burness

When politics gets personal

As I’ve noted in this newsletter before, policy outcomes and various votes at the Colorado statehouse are sometimes determined more by the personal than anything else. The failed death penalty repeal of 2019 is a perfect example of that.

Here’s another good example: Last week, Senate Democrats voted to oust Sen. Rachel Zenzinger of Arvada from her post on the Joint Budget Committee (JBC), replacing her with Sen. Chris Hansen of Denver, a former member of that committee. The committee loses a moderate voice in Zenzinger and gains a more progressive one in Hansen — but that’s mostly incidental.

You have to be a hard-core Capitol nerd to understand why this swap is so juicy, but it is: During caucus leadership elections, Hansen was nominated to the JBC by the committee’s chair, Dominick Moreno, who has served for the past two years with Zenzinger on the JBC. Moreno told his colleagues that he simply meshed better with Hansen, who generally has a reputation in the caucus as being easier to work with than Zenzinger. 

“These are hard things to say out loud, but it’s important that they’re acknowledged,” Moreno told The Post this week.

“Unquestionably, it would have been easier to avoid an awkward situation there” by staying out of it, he added. “These elections are painful because you decide between friends and colleagues you have a lot of history with.”

The outcome was certainly painful for Zenzinger, who had argued that she deserved to stay on the committee because she had done good work and because of the importance of women’s representation.

Hansen said he and Zenzinger, who did not return a text from The Post seeking comment, spoke after the caucus vote.

“She was visibly upset,” he said. “I think anyone in the room could see that. We exchanged a few words, and I tried to make it clear from my side that I was in no way going after her.”

One can appreciate why this might be hard for Zenzinger to swallow. She has put in two years of service on the committee, and in public statements her colleagues have nothing but good things to say about her work there. She really wanted to keep that title. The episode is a reminder of how personal politics can be, even among friends.

More Colorado political news

  • Alec Garnett is the new speaker of the Colorado House, and Daneya Esgar is the new House majority leader.
  • A soul-searching Colorado House GOP caucus picked Hugh McKean as its new leader.
  • Here’s how workers and businesses are reacting to last week’s passage of Prop 118, the paid family leave measure.

Mile High Politics • By Conrad Swanson

About those new Denver taxes

While Denver’s budget continues to suffer from the ongoing coronavirus pandemic — and many wait to see if things will worsen economically with the possibility of a second stay-at-home order on the horizon — voters approved two new taxes last week.

The two new taxes — one for green initiatives and the second to help people experiencing homelessness — will raise Denver’s already-high sales taxes to 4.81%. Each is expected to raise between $30 and $40 million a year, depending on how the local economy is doing. 

Both will take effect Jan. 1. 

City officials behind the initiatives are now determining more precise details on how best to spend the cash, but they already have a loose framework. 

Cash from 2A must be spent creating green jobs, solar power, battery storage and other renewable energy technologies as well as neighborhood-based environmental and climate justice programs, among other things. 

Cash from 2B must be spent on things like shelters, catalytic projects and services for the unsheltered. Denver’s Department of Housing Stability will write annual reports on how the money is being spent and whether the investments are working, and an advisory board also review reports every other month and can recommend changes or investments. 

City Councilwoman Robin Kniech, who sponsored 2B, has said that the cash would become available to spend at the end of January 2021 and she, alongside other city officials, have until then to build on the existing framework. 

Many have criticized the taxes as regressive, meaning they charge more to those who can least afford it. But Kniech and Councilman Jolon Clark, who sponsored 2A, have said delaying action on climate and homelessness will only make matters worse and increase the eventual bill Denverites must pay. 

More Denver and suburban political news

  • Although partnering organizations have yet to file a formal application to open and operate Denver’s first sanctioned homeless encampments in Capitol Hill, those opposed — some high profile — are wasting no time.
  • Denver City Council approved the city’s 2021 budget Monday evening with some relatively minor concessions from Mayor Michael Hancock for increased investments in police reform and eviction defense, among others.
  • Denver voters approved two measures last week that effectively check Mayor Michael Hancock’s powers, shifting more authority to City Council.

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Categories
World News

Here’s how much snow you might see during the weekend storm

As fires continue to burn at historic levels throughout the state, some relief is on its way.

But the expected snow totals vary widely, according to the National Weather Service in Boulder.

Denver’s expected forecast calls for between 6 and 10 inches. In Estes Park, where further evacuation issues were ordered Saturday as the East Troublesome fire pushed toward town, forecasters are calling for between 3 and 10 inches. Fraser could see similar totals.

Fort Collins and Boulder, meanwhile, could see up to a foot of snow.

Winter storm warnings are in effect from Sunday into Monday morning for the mountains, foothill and much of the Interstate 25 corridor, while the Eastern Plains will be under a winter weather advisory.

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