This week, I wanted to do something a little different from usual. So, I got together with Kelly, a friend and colleague, for a brief Zoom fireside chat/interview. On the agenda? Leadership succession planning within the real estate industry.
Kelly: Jennifer, it’s a pleasure to speak with you. Today, we’re going to speak about leadership succession planning for real estate businesses. To kick things off, could you share a bit about your background in leadership development?
Jennifer: It’s great to be here! I’ve been fortunate to work in leadership development for a long time. My first major job was creating a program to train managers for a national company that was growing quickly by buying smaller businesses. Sometimes, they would buy a competitor with multiple branches in the same city, and they needed to choose the right person to lead all those branches and create a team that worked together instead of competing.
My team and I defined the skills needed for management and created a fair way for managers to choose the right people for the job.
I did a similar job for a global consumer products company in different parts of the world, and I also held various leadership roles myself.
When I left the corporate world and started my own business in 2000, I began coaching leaders of small companies to help them improve their skills and get ready for leadership roles in the future.
I also coach several CEOs and their Boards ensure leadership transitions are successful and to plan for the company’s future growth.
Kelly: That’s wonderful, Jennifer. What do you think is the secret to identifying the right successors for family businesses? And preparing them to take over?
Jennifer: In my experience, it’s all about understanding what it takes for someone to become a leader and then helping them grow. And more importantly, that leaders – at all stages in their career – stay open to learning.
The successor needs to know the business, understand and live the family’s values, be able to learn quickly on the job, and get the family dynamics. Most importantly, they need to be open with all family owners about decisions.
The current leader and his/her boss must also be willing to plan and make the handover of leadership as smooth as possible.
In simple terms, it’s about finding the right person and supporting them through the challenges of the transition. It’s a journey I’ve guided many times.
Kelly: Let’s turn to your personal journey. Can you share some of the challenges you faced when taking over a family business as a second-generation owner?
Jennifer: Oh, absolutely. It was like diving into the deep end and only knowing how to dog paddle.
Overnight, I was responsible for everything, and with minimal preparation. I had to deal with complex financial agreements, a lack of technology infrastructure, legal concerns, and a bunch of other intricate things related to real estate. Plus, our mom was not well. She gave me her power of attorney the day our father died and said she was done. And we had our own family dynamics to address. My sisters and I did the best we could.
We all knew for 25 years that I was going to assume this role one day. I didn’t work in the business though and lived in a different state.
Every time I saw my dad, we’d review the different companies and holdings, partnerships, mortgages, and who knew the details, etc. There was so much I didn’t know to ask – like a mortgage moving into special assets, working through the various county and state, legal, and tax requirements, how to handle a down real estate market, etc.
I mean, I didn’t know the critical elements of a commercial real estate contract. I didn’t know how to refinance with a bank, or how to negotiate a new lease agreement with a global company who rented one of our properties. There was a lot of legal stuff, like eminent domain, that I had to learn on the fly. It was a real learning experience for me. And ultimately, we are successful.
Kelly: It sounds like quite the challenge. Before we wrap up, what’s your advice to family real estate business executives who are looking to ensure a smooth transition and secure their business legacy?
Jennifer: I’d say it’s crucial to recognize the importance of leadership succession. It’s not just about passing the torch. It’s about securing the continuity of your family business for generations to come. And it’s important to be transparent. To talk through the difficult issues. To educate all family owners about the financials of the business as well as your intentions. To find out what they want. I also think it’s important to make that leadership transition before it’s needed, rather than in a crisis.
Kelly: Well, thank you, Jennifer, for sharing your valuable insights and experiences. I’m sure there’s lots we can take from this.