By Rick Segal

Professional athletes often extend their careers beyond their prime. Sometimes they even get to a point known as “punch drunk.” Maybe it’s because of money, celebrity, career goals, or nothing in the “what’s next” column. Regardless, supporters look at those athletes as playing too long to the detriment of their careers and even their legacy.

The comparison of the aging athlete to the family business CEO has parallels. There is one huge difference though – the aging athlete is normally retired by a third party like the president or GM of the franchise. Of course, that’s if the athlete lacks the wherewithal or wisdom to see the writing on the wall and move on voluntarily. If that athlete fails to take voluntary action, it will be done on their behalf and most likely the outcome will be less than desirable for anyone. If they still have some passion for the game, maybe they will wind up coaching or in the front office.

In a family business that aging CEO generally holds all the cards. They are the decision-maker about their own future. Like the athlete, they generally do not see their skills fading, rather they see themselves getting better with experience, expertise, and wisdom. Therefore, they do not see the twilight of their career as being detrimental to the business, or their followers – their family.

At what point are they no longer helpful to the team in their current position, and whose decision is it? If it is time to move on, where do they go and how do they get there?

Using Metrics
Athletes have very clear metrics. Speed, percentages, yards and points are the measurements of performance. Even as the metrics dwindle for the aging athlete, other more subjective measurements can replace them, like mentoring, locker room leadership and team culture development. When the athlete’s value to the organization fades to a point where the Return on Investment no longer makes good business sense, either the career ends, or a “trade” becomes the new reality. But there are no trades in a family business.

What metrics would you impose on a family business CEO? Profitability, growth, family prosperity, market prominence, family harmony, community admiration and sustainability come to mind. Some are easy to measure, like profitability, but even then, the water can get murky. Suppose that potential profits are distributed as bonuses prior to yearend in lieu of retained earnings to fund growth. How would you spin that decision to address the metrics? And, five years from now, when you compare and review financial statements, who will recall that decision and why it was made? That’s why picking the proper metrics is so vital, maybe Gross Profit Percentage is a more accurate metric than Net Profit.

If a family business CEO had something akin to a baseball card, what would the stats on the back be?

Each business needs to develop their own set of performance metrics for their executive team including the CEO. The harder part is applying those metrics to senior family member’s (parents) performance in a positive way. Like the aging athlete, senior family execs still feel that they add value to the team. And they probably do, but not the same value they added in the prime of their career.

Here is a great case for a board of directors. It is far better for a board to develop and apply those metrics. A takeover coup by a sibling team to oust an aging CEO won’t fare well for anyone – no matter how kindly it’s done – and certainly it won’t add to family harmony. On the other hand, a well thought out set of metrics applied by an appropriate group would offer a smoother transition.

Like the pro athlete, sometimes the senior CEO needs to be told when their career needs to shift. That’s why some families set up mandatory retirement rules to avoid potential conflicts.

What’s Next?

The retiring CEO will need to develop a new game plan. Hopefully, they have cultivated interests and hobbies to fill time meaningfully. Certainly, if they saw this coming, they would have begun designing that “third stage of life.” Whether it be travel, tennis, bridge, gardening or grandchildren, having importance to daily activity is imperative for the sole.

While that individual doesn’t necessarily have to be exiled from the business, they do have to step down in a significant way that empowers the next leader(s). I recall a client who gave up title, compensation and ownership, yet still reported to the same corner office daily. They had nothing better to do. If the former CEO is physically in the same place, then it makes sense that people see them in the same position.

Ideally the breakaway will come with a time separation like a big trip, extended winter stay somewhere, or more time at the summer spot. After that, a position that honors their expertise, experience and wisdom should be cultivated by the business. Good Will ambassador, Chair of the Board (without being controlling), maintaining key contacts, becoming a sale “closer,” are all good roles to explore. Formalizing the new position really helps everyone involved see the change.

The Next CEO
No matter what style of leadership you favor, in a family business it is usually considered part of the DNA. While some family firms do look outside for CEO talent, most look to family first. That’s fine if the identified party has the right stuff. That individual has probably been a CEO in training their whole life, but that doesn’t mean they are the right choice now. It should always be about the right person for the situation at hand. We’ve all seen businesses go down by picking the wrong CEO.

Once again, this is a difficult decision, especially if there are multiple siblings involved. Some family firms have a hard time setting aside the “rights of the firstborn son” (“primogenitor” – yep, actually a word for that). This selection should be a process that’s designed and enacted by a committee to make a good choice that creates buy-in. Again, your board of directors, or a subset, would be a perfect fit for this committee.

An outgoing CEO anointing the next CEO is just a bad idea unless this is truly a monarchy. Process is the key to a good outcome.

Summary
1. Establish formal metrics for CEO performance.
2. Apply those metrics using an appropriate committee like a Board of Directors.
3. Determine whose decision it is to fill the vacating position.
4. Use a qualified committee to make key decisions.
5. Develop a process for the selection of a new CEO that will ensure the best choice is installed.
6. Empower the new CEO and their team with the tools and talent need to do the job.

Being proactive about an obvious transition just makes sense. Design a process that will yield the best result with strong buy-in and a minimum of disruption. If you aren’t sure how to do that, reach out to a professional.

By Kristen Cifolelli, American Society of Employers

While the weather recently hasn’t exactly been warm, Memorial Day weekend is right around the corner and it marks the unofficial start of summer.  As the rain will eventually (we hope) start to let up, the attention of many employees will turn to thoughts of getting outdoors, spending more time with family, and having some downtime to unplug and recharge.  One benefit that is dramatically on the rise are employers who have implemented a “summer hours” program.

A “summer hours” program is when employers either reduce normal work hours in the summer months or allow their employees to work compressed weeks or flex their schedules to work more hours on certain days in order to leave work earlier on other days – typically on Fridays.  According to a 2017 survey conducted by CEB (now Gartner) of Fortune 1000 companies, 42% now support a summer hours program, a 20%+ increase compared with 21% in 2015.  In addition, a recent EPTW poll revealed that 32% of readers’ employers offer flexible work hours in the summer.

According to ASE’s data released this year in our Workplace Flexibility survey, overall 18% of employers offer a summer hours program while 28% of employers with over 500 employees offer summer hours programs.   For those employers who have such a program, 38% offered it in a compressed work week format, while 33% offered a partial day off.  Only 5% offered a full day off, and the remaining 33% offered some other type of arrangement. 

Some examples of summer hour programs include:

  • Compressed work week.  Employees can work nine or ten hours Monday through Thursday and take a half or full day off on Friday.
  • One day off every other week.  Employees spread the extra eight hours of work they need to make up in the previous nine workdays. Employees rotate which Friday they have off to ensure coverage.
  • Early closing on Friday or shortened workday (no extra hours to make up)
  • Change in core hours.  For example, instead of working 8:30 a.m.-5:00 p.m., employees can come in at 6:30 a.m. and work until 3:00 p.m.
  • Telecommuting for part of the week.  This allows employees to start and end work earlier by eliminating commuting time.

Without a doubt, a big benefit of a summer hours program is that it is a huge morale booster.  For employers with limited budgets for increases, bonuses, or benefits, it is a low-cost perk to implement that will be highly valued by employees.  These longer weekends allow for employees to come back to work on Mondays more refreshed and recharged, thereby increasing productivity and creativity levels. 

So, while the benefits of these programs for employees is obvious, do these alternative summer schedules actually provide more engagement and productivity in return?  

CareerBuilder in Chicago is one employer that firmly believes their summer hours program boosts morale and retention.  All 2,000+ employees in their North American offices are encouraged to leave at noon on summer Fridays.  While most employers who have summer hours programs require the hours to be made up, CareerBuilder will pay people for 40 hours even if they only work 35.

According to Jade Augustine, Vice President of Human Resources, initially there were concerns about whether employees could meet their work obligations in the shorter hours; but there has been no negative feedback from clients.  Work teams ensure there is coverage, if needed, so customers aren’t left in a lurch.  “We really empower the employees to manage their time” and there is motivation to be particularly efficient the rest of the week to guarantee an early escape. “If at any point it feels as though it’s not being managed properly, the manager is there to work with them.”

Many companies that offer such programs often indicate the return is much greater than the work involved in developing and monitoring the program. These companies also report that employees tend to take fewer vacation days during the summer as a result of having longer weekends and more flexible schedules.  It makes planning for employee vacations much easier, as they are spread throughout the year.

If not monitored appropriately though, there are always employees that will view these programs as a way to slack off and avoid work responsibilities or come dressed on Fridays wearing their beachwear or athletic apparel in preparation for their weekend activities.  One other significant pitfall is that there will always be positions that are not suited for this type of program, such as customer service or other client-facing roles.  Employers need to be prepared to deal with employees who will be disappointed that they can’t take advantage of this benefit.  Other employees may feel frustrated that the perk is offered, but they aren’t confident they can get their work done in fewer days—resulting, ironically, in greater, not less, stress. 

If employers are going to consider implementing a summer-hours program, certainly the first step is to outline the costs involved and the benefits that will be derived, such as higher productivity and more engaged employees.  A must is to ensure that the policy is well written and well communicated so expectations about getting work done are clearly understood. Coordination will be critical to make sure there is adequate staffing.  Ultimately these programs can be a terrific way to show appreciation for employees, and a powerful recruitment and retention strategy for employers, to set themselves apart from their competitors.

By Sara Sosnowski, American Society of Employers

According to MetLife’s 17th Annual U.S. Employee Benefit Trends Study 2019, 80% of employers agree that benefits play an important role in workplace culture, and 78% say that benefits even help employees to be more productive.  Benefits are also an important factor when it comes to attracting new talent, with 6 in 10 employees citing benefits as an important reason why they joined their company.  But if benefits are so important, why are only 67% of employees satisfied with their own benefits?

As the line between work and life is getting more blurred, employees expect more from their employers to help support them both inside and outside of the workplace.  76% of employees agree that employers have a responsibility for the health and well-being of their employees.  When asked what they need to be more successful at work and at home, better benefits was the third highest request made by employees, coming in behind salary and a positive work environment.  On top of that, 3 in 10 employees reported that they would even be willing to trade a higher salary to get better benefits.  Employees still consider the traditional benefits as must-haves, with the top three being health insurance, prescription drug coverage, and dental insurance, but they desire some less-traditional offerings as well.  Some of the highest rated “nice to have” benefits were legal services, cancer insurance, and financial planning education and tools. 

As employees are now mixing work and life, there is a need for mixing emerging benefits with the traditional ones to support them physically, emotionally, and financially. 58% of employees say that having nontraditional benefits would reduce their stress, and 60% say they would be interested in a wider range of less traditional, non-medical benefits, even if they must cover some of the costs themselves.  93% of employees want the ability to customize their benefits package, something employers aren’t understanding, as only 68% see this ability as important to their employees.

Some of the emerging benefits that interest employees most are:

  • Unlimited paid time off – 72%
  • Wellness programs that reward healthy behavior – 69%
  • Phased retirement program – 68%
  • Paid sabbatical program – 66%
  • On-site free/subsidized services (e.g., meals, gym, dry cleaning) – 61%
  • On-site health/medical care (including mental health) – 59%

Even if an employer does offer a benefits package that addresses most of their employee’s needs, if employees don’t fully understand what is offered, they won’t appreciate them or their potential impact on their lives.  Only 37% of employees strongly believe their employers’ benefits communication is customized to address their personal situations and only 4 in 10 employees strongly believe their employer’s benefits communication is simple to understand.  Employers should concentrate on communicating not only what benefits they offer, but also how those benefits are relevant in the lives of their employees.

According the study, “To meet the changing expectations of today’s workforce, employers need to ensure that they are building benefits plans that meet their employees’ wide range of needs. Equally important, employers should ensure that employees fully understand the value of their benefit options — so they can make the right decisions for their needs and companies can realize the full impact of their investments.”

By Jason Rowe, American Society of Employers

Michigan employers see value in providing their employees flexible work arrangements, with two-thirds offering some form of the benefit. Over half of employers market their flexibility arrangements as an employee benefit to attract new talent, as is shown in ASE’s recently released Workplace Flexibility Survey.  This is the first-ever Workplace Flexibility Survey conducted by ASE.

Some insights uncovered by the Workplace Flexibility Survey include:

  • The most prevalent flexible work arrangement offered by organizations was flexible hours/flextime (83%).  This was followed by telecommuting, with 62% offering the benefit, and 46% allowing part-time schedules.
  • Most organizations that utilize flexible hours/flextime allow employees to have varied start and end times (96%).  Most organizations require employees to be present for core hours (79%).
  • Telecommuting arrangements are most frequently allowed at the discretion of the manager (79%) and are offered on an ad-hoc basis (77%).
  • Technology has made telecommuting more efficient and viable.  54% of respondents indicate using some form of collaboration software and another 52% indicate utilizing some form of video conferencing.  Instant messaging, popularized in the mid and late 90’s, was utilized by 75% of those surveyed. 
  • 11% of organizations offer paid parental leave beyond FMLA, short-term disability, or what is required by law.  For birth mothers, fathers, and adoptive parents, most organizations gave employees their full pay while on the parental leave.
  • 18% of organizations offer summer/seasonal hours, and a majority of them use a compressed workweek (38%).  The most popular form of the compressed work week is a 4/40 schedule where employees work four 10-hour days per week.

Workplace flexibility continues to be a priority in a society that craves a better work/life balance. In time, Michigan will likely see a greater shift away from the traditional 9-5 workplace schedule towards an arrangement that allows employees to feel less constrained by the demands of working inside of an office.