Expectations of Management Choosing the right CEO from the cousin consortium

Agenda/Introduction

Background-Tobin Brothers & key Players Outline a story that’s worked Management, not equity succession Detail the distinct phases of our Plan Reasons for its success Expectations Analysis

Tobin Brothers Funerals

Largest family owned Funeral Co. in Australia Founded in 1934 by my grandfather and his

three brothers; Currently 13 active family members Turnover of $22+ million 130 Staff, across 19 locations 4500 funerals annually (1 in 5 Melbournians) FBA’s 3rd Generation Family Business of the

Year Award (1999 & 2004)

Martin Tobin

3rd generation MD (since late 1998) Arts/Law at Monash Solicitor for four years MBA at Melbourne Business School FBA’s Victorian Chapter Committee

The Tobin Family

Road blocks to Succession Planning

Reluctance of incumbents to let go Difficulty selecting one family member over

another Incumbent has nothing to do in retirement Concern that his/her successor will fail Fear that his/her successor will do better

1st to 2nd Generation (late 1970s)

Kevin Tobin, conservative, prudent founder Des Tobin, restless, innovative nephew Second eldest of 4 second generation

cousins Des evolved as natural successor Broad support of his three cousins Long wait; Kevin retired in 1981 at age 71

2nd to 3rd Generation (early 1990s)

TB far bigger and more complex Funeral industry more competitive Several non-family senior managers had

emerged Eight 2nd and 3rd generation Tobins in the

business No natural family successor within business

Phase 1-Recognising the Need1992/93

Des, at 55, at peak of working life Conscious of his mortality Saw company needed new blood First hand experience as a successor Had a life outside of work Importance of enlightened incumbent

Phase 2-Building the Framework1993 Family & Board agreed to role criteria Agreed to go outside company if necessary “Cousins” assessed against agreed criteria

(plenty of self assessment) Potential external “cousins” assessed (from

which I emerged) Management team and family consulted Decision communicated to staff from outset

Agreed Role Criteria

Business related tertiary qualifications Strong communication skills Time management skills Natural Leadership qualities Ability to handle stress Ideally, some experience outside the

business Preparedness to embrace IT

Phase 3-Leadership Development1993-98

Detailed program written with my input Escape mechanism created Exposure to all areas of business; service

delivery, administration, sales/marketing, staff training etc

Further training; MBA at Melbourne Business School (1997-98)

Formal management responsibility

Phase 4-Changeover Nov 1998

By late 1998, we were ready Des had just turned 60; I’d just turned 33 Decision communicated to staff and

externally (advisers, business media etc) Handover function (not a retirement roast) Occupied MD’s office and employed new PA Des relocated to another branch

Phase 5-Transition1999-2001

Des stayed on as Executive Chairman Clear demarcation of duties established A real job; specific projects, adviser,

consultant, mentor, devil’s advocate Other involvements; FBA, Golf, writing Monthly quality time meetings

Post Mortem

Far from smooth sailing, but it worked Des ultimately sold equity too “Cousins” supportive of my leadership Company still performing strongly Model for other internal applications (ACC) Vehicle to join the Speaker’s circuit

Reasons for success

Treated succession as a process, not an event Enlightened incumbent leader Started thinking about it well in advance Established objective criteria Found someone who met them, rather than the nearest “fit” Communicated plan to all stakeholders

Treated process as investment not a cost

Reasons for success (continued)

Focused on successor’s development needs, and treated them as an investment, not a cost

Built in processes for retiring leader to support, advise and mentor the successor

Provided successor scope to develop own leadership style

Created a meaningful ongoing role for the retiring leader

Expectations of PlayersInherent Tensions

Incumbent Successor “Cousins” Staff Advisers

Expectations of the IncumbentI’m out of here (sort of)

Retain a meaningful role (for a while) Freedom to step back Maintain a reasonable income Contribution recognised Strategy & Legacy respected Experience utilised

Expectations of the SuccessorBe gentle with me

Actual, not notional leadership Scope to build own management team Scope to use own advisers Given a reasonable honeymoon period Ongoing appraisal/recognition Return to father/son relationship

Expectations of the “Cousins”We’re with you, provided….

Our role & contribution is recognised We’re kept informed and have a say Our investment is well managed We progress and develop too

Expectations of StaffSo what’s Changed?

Cultural lag Sceptical about prospect of change Slow to embrace change Reluctance to acknowledge change But change happens (whether they admit it or

not)

Expectations of AdvisersBusiness as Usual

Assumption of continuity Treat successor as a new client Re-articulate value proposition Change of personnel?

I’m not afraid of death; I just don’t want to be there when it happens

Woody Allen