DCU CFB National family business conference 2016

PowerPoint Presentation

Attracting and retaining family and non-family talent in your business

12th April 2016 #CFBconference

Mr Jim EthierBush Bothers & Company

Keynote Speaker

Bush Brothers & Co.

Spillin the Beans

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Spillin the Beans

2016: The Year of the Pulse

Millions of Pounds

Sources: Syndicated sources including SAMI; IRI; ACNielsen Scantrack; ACNielsen Homescan; Nielsen Grocery plus Wal-MartSupercenter sales estimated from 2002-2007 based on panel share of Grocery & Supercenter; 2008-2009 from 4th Channel Panel; 2010-2014 from Nielsen TUS Food + WM SCBushs Best growth in the Prepared Beans Category began 35 years ago6

6Our reputation for developing winners in the bean category is well known and first in class. Take our baked beans for example. It was launched in 1972 as an upgrade to our pork and beans and met a consumer need that has transformed the category. Nearly 40 years later, Bushs Best is still meeting the growing consumer need.

Bushs Best is also the largest single brand of variety beans.

Macro Trends -> Canned Beans Trends -> Baked Consumer Insights Post Theme_718.pptx

A.J. & Sallie Bush

Mission StatementBush Brothers & Company is a community making a difference by providing nourishing branded bean products.

As we perpetuate and strengthen our company, we will provide with reasonable balance:Value to our consumersService to our customersOpportunity to our team of employeesEnhanced value to our ownersStability to our suppliersResponsible citizenship in our communities

Together, we will live by the values of integrity, responsibility, trust and caring as exemplified by our founder, A.J. Bush.

Beyond Survival by Lon Danco

Organization Chart

Lon Danco

Family VisionVISIONThe Bush Family is the steward of a family-owned enterprise that creates value and is committed to its community of companions, today and for future generations.Together, we will live by the values of integrity, responsibility, trust and caring as exemplified by our founder, A.J. Bush.GUIDING PRINCIPLESWe support and contribute to the vision, mission, and strategies of Bush Brothers & CompanyWe cultivate engaged and responsible ownership through lifelong educationWe develop and encourage family members to participate in our family governance structure and/or to become qualified company employees.We are committed to making Bush Brothers & Company a great place to workWe promote family unity through communication, collaboration, and shared contact within and outside of family enterprise meetingsWe embrace opportunities to give back as a family enterprise to our communities and the world

Homeplace

School to Medical Center

A.J. Bush General Store & Visitors Center

Community of Companions

Family Directory

Shareholder Handbook

Charles HandyAn organizations ultimate purpose is to aim for immortality, to create a community that will last not only through your lifetime but that of your grandchildren, should they choose to work there and you would hope they would. To do that, of course, you must finance your future. It must be a good place to work. And, by God, you must have products customers want to buy. But all these things are a means to an end: to be an everlasting community that adds wealth to society.

Best practices for non-family involvement: lessons from Irish family businesses

#CFBconference

Ms Eimear LynchStafford LynchOur panellists

Mr Paul KeoghBallymore Group

Dr Eric ClintonDCU CFB

Best practices for non-family involvement: lessons from Irish family businesses

#CFBconference

Welcome and Good Morning!Eimear LynchCompany Secretary and Assistant to CEO & Founder.

A Bit of Background!Graduate of DCU Marketing & Fr/GerDiploma in SpanishDiploma in Digital Marketing25 years in SLPrimary area of focus marketing and strategy.Company Legal and Secretarial work.

Stafford Lynch Company Overview

A Few Quotes :When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much the old man had learned in seven years. Mark Twain

Call it a clan, call it a network, call it a tribe, call it a family: Whatever you call it, whoever you are, you need one. Jane Howard

Meet SL Sandy LynchRumoured to be in pole position for role of MD. Young and inexperienced but very enthusiastic!

THE LYNCH FAMILY:Matthew Lynch- Founder and CEOWas ex- Erin Foods. Sold Sudocrem to Forest Laboratories in 1989.Garrett Lynch Was DS NAM and now Foodservice DirectorUna Lynch- Management Team and founder of the foodservice division.Kevin Lynch- Works outside the business.

OBJECTIVES: To trade profitably.To ensure future success of business.To attract and retain key staff.To function as cost effectively as possible.

Structure of the Board:

Company Overview 41 years in operation.Turnover 45m.104 employees.80,000 sq ft facility.

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LOALGBLCLORTIXPEEEANDSR

Our Brand PartnersGLOBAL BRANDS, LOCAL EXPERTISE

RETAILER RELATIONSHIPS

MARKET DATA CATEGORY DEVELOPMENTDATA RESOURCES & SOFTWAREEXPERIENCEPRINCIPAL RELATIONSHIPS

Business Management

Major Issues when dealing with Family:Parity of Esteem within the familyFamily Constitution vs Shareholders AgreementSuitability for the roleBehaviour speaks louder than wordsClarity and Respect for Senior Managers 3rd Generation familySuccession

Incentivising Non- Family MembersEquity vs Profit ShareEqual opportunitiesKeep family disagreements out of the Boardroom.Work with your strengths:Flexibility in the workplaceSpeed of decision makingAutonomy

Issues for Family Members:

I made the decision when I came to Seagram that it had to be OK that my public persona would be bad. It's the downside of a family business: anything good is because I'm somebody's son; otherwise, I'm a schmuck. Edgar Bronfman, Jr.

Challenges for family members:

Many of the tools used to retain non-family talent are never applied to family talent.Little or no feedbackNo AppraisalsResponsibilities to employees

The Next Generation!A man should never neglect his family for business. Walt Disney

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Talent Management in Family BusinessesDr Melrona KirraneOrganisational Psychologist, DCU Business SchoolProfessor of Leadership, PNU, [email protected]

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Guiding PhilosophyHolistic view of the employee population

The workforce is regarded as a valued entity

Providing guidance and support to achieve full potential

Shared vision within a supportive cultureEDUCAUSE Live!

Traditional Employment vs. Talent Management Focus

Traditional Employment FocusTalent Management FocusSkills & educationDuties & responsibilitiesSome characteristics (strength, repetitive, endurance, etc.)Experience

Traditional plus more scrutiny on TraitsBehaviorTalentnatural aptitude or skill

Talent Management practices must be aligned with Strategy

44This is a picture to remember and the central model within the course. It is a simple but very useful framework for an integrated and comprehensive view of talent management. It also serves as a visual table of contents for this course as we will consider each of the components of the talent employee lifecycle: workforce planning, talent acquisition, employee engagement, talent development and deployment, managing and leading talent, talent retention and evaluation and metrics.

The inputs and outputs to the talent wheel are vital. All talent practices must be aligned with the strategy and direction of the organization or else they are useless. Strategy: 1) leads to human capital requirements that 2) dictates the best use of talent practices that 3) results in an engaged, productive and committed workforce that, in turn, 4) yields measurable outcomes and impacts.

The key word here is alignment; all of these pieces must be synchronized and working together for the organization to be maximizing the potential energy of its talent. This horizontal alignment is not present in many organizations and this is why so few organizations are good at executing strategy.

This visual can also be used as a diagnostic: how is alignment working in your organization? Are you performing all of these talent practices effectively? Is there a seamless join (in plumbing terms) among the various talent practices? Are measures, metrics and accountabilities in place to judge how effective the practice of talent management is?

The serious sideAll companies registered in Denmark are required to include in their annual reports information about customers, processes and human capital.

A minimum of five measures for each is required and comparisons with the previous two years must be shown.

Information for investors about intellectual capital both current and future should occupy at least one third of the report.

The tide for the importance of human capital management is not receding. The Talent Age is approaching fast. Strategic Human Capital Management is at the top of the Presidents Management Agenda, companies are publishing addendums to their annual reports on the state of their human capital, and countries like Denmark are fully understanding the role that intangibles play in the valuation of organizations.

Denmarks policies do not dictate which five measures to usethat is up to the organizationbut that human capital metrics are required and must be analyzed over a two-year period of time. Furthermore, this information cannot be relegated to a page or two in the annual report; it must comprise one-third of the report.45

Differences between family and non-family businesses

These differences result in barriers to professionalization1. Cognitive impediment

Family business managers may not recognize the need for change

EnvironmentalDisturbance

Poor external alignment

Outcomes

Decreased customer focus

Increased Cost

Less innovation

Domore ofthesameDenial & rationalisationDecliningperformanceDeath spiralLearning disabledSuccess Syndrome

Complacency

Arrogance

Internal focusProlonged period of success

The trap of success(Adapted from Nadler & Shaw 1995)48

2. Cultural impedimentsNorms of kinship systems at odds with economic rationality

Their need to channel resources into their venture conflicts with obligations from the webs of kinship

If they prioritize family membership less than is normative in their culture, emotionally painful conflict is liable to occur

3. Emotional impedimentsParental altruismParental recognition that children should develop independence, which conflicts with a desire to indulge them.

Similarly, siblings or cousins might recognize the need to promote the most capable offspring but find it hard not to view their own children as more capable than their nieces and nephews

PLANAQUIREENGAGEDEVELOPDEPLOYLEADRETAINEVALUATE

PLANAQUIREENGAGEDEVELOPDEPLOYLEADRETAINEVALUATE70% of organizations have a weak pipeline. Cost per day when operating without a key player - 7,000Cost of poor hire 300K - 500K impact

Most businesses operate inefficiently due to poor levels of engagement levels6 months is time required for a new manager to become productive20% of a companys employees are well suited for their roles12 employees are directly affected by average managers actionsCost of losing a talented employee 250K-500K

Value of top performers 2 to 3 times the performance of average employees

From 1998 to 2006, the stock of the companies identified in Fortunes 100 Best Places to Work for in America list outperformed that of the S&Ps 500 by more than 230%.Fortune, 2006Organizations that apply talent management practices demonstrate higher financial performance compared to their industry peers. IBM/HCI Research, 2014Companies with superior human capital practices can create more than double the shareholder value than companies with average human capital practices.Watson Wyatt Research, 2013

53The research data are clear: there is a direct relationship between talent practices and improved financial performance. The actual chain of relationships is that effective talent practices lead to stronger productivity that, in turn, results in better financial performance of the organization. In the last six to eight years, study after study has shown this relationship.

It is important to state that this is a relationshipa correlationand does not prove conclusively that strong talent practices cause (by themselves) better financial performance. It is more correct to say that because of all the corroborating correlational studies, talent practices appears to be one factor that relates to stronger financial performance. It is also a factor that can be improved and enhanced over time, whereas other contributors to financial success (such as the cost of raw materials or the market success of a product) may not be so malleable.

You have to treat your employees like customers. When you treat them right, they will treat your outside customer right. This has been a powerful competitive weapon for us.Herb Kelleher

54Success stories are useful ways to examine the role that talent management can play in the growth and development of an organization. Southwest Airlines is the largest domestic air carrier in the United States. It is also the only one that is and has been consistently profitable for a number of years. Its success has been determined by a number of factors. 1) A clear and consistent strategy of democratizing the sky and travel for a low cost; 2) Some key operational choices early in the airlines development that allowed it to prosper, even if against conventional wisdom: No hubs, one type of airplane and going into cheaper airports within big city regions. 3) Some good decisions that impact operations in a real-time mannersuch as the hedge on fuel at $51 per barrel which helped them for several years but is now a drain as the price of oil has plummeted; and 4) their talent strategy that puts employees first.

Southwest has built a powerful talent brand, and every year there are over 100,000 applicants for about 5000 jobsso that its harder to get a job at Southwest than to get into Harvard. Others have tried to emulate the Southwest talent culture because of its role in the overall success of the airline.

This story shows that there are several reasons for successnot just talent management; but that unlike gambles on the price of oil; talent is always a lever that can be developed and improved.

The New MetaphorsPeople are not your most important asset, the right people areThe metaphor of The BusPepsiCo 5RsPeopleSkillsJobTimecost

55Jim Collins has written the biggest selling business book of all time in Good to Great. It contains a number of powerful ideas and lessons, and several directly apply to talent management.

First, he challenges the oft-quoted phrase that people are our most important asset. He states clearly that it is the right people who are your most important asset. It is not all people or even the smartest people, its the right people for the job.

Second, he introduces the metaphor of the bus as a way to emphasize his views on the right people. He says that in order to execute strategy and get where you want to go, you need the right people on the bus, the wrong people off the bus, and then put the right people in the right seats. This is a succinct way to describe an important outcome of talent management practices.

Another easy to remember way to think of talent management is the 5Rs that Pepsico and other companies espouse: we want the right people with the right skills doing the right job at the right time for the right cost.

These are both good foundational pictures or acronyms to keep in mind while thinking about talent management.

Characteristics of human-capital centric organisationsThey're obsessed with talentThe business strategy hinges on talentPerformance management is a top priorityBoard members are experts in human capital managementHiring and review processes are rigorousJob descriptions can be vague or open-endedThey offer employment contractsThey don't hold back technologyEmployees share in the company's financial successLawler, 2008

Five Basics in Implementing Talent ManagementIdentify and Assess Existing & Needed TalentsHiring and Developing StaffHigh Value AppraisalsUnderstanding Compensation & its ImpactTurnover and Succession Planning

EDUCAUSE Live!

Talent Management Adoption Model

Human Capital Institute, 2010

5858Another way to analyze a professionespecially a horizontal profession that supports the enterpriseis to segment the job into administrative, operational and strategic components. This can be done for IT, finance, marketing, and HR.

Administrative jobs often can be outsourced or automated. If jobs are relatively simple, repeatable, and process-driven, they should be accomplished through the most efficient means possible.

Operational jobs frequently require more complex skills and judgments, but may still be subject to greater efficiencies, including self-service centers, automation and partnering.

Strategic valuethe top of the pyramidis where the partner and player roles are evidenced. This segment not only provides the greatest value to the organization, but it provides greater security to the individual. It behooves everyone to want to play at the top of the pyramid. Consultants can be used to strengthen strategic capability (the Borrowing of the 6Bs); but HR professionals should aspire to providing this level of value themselves.

Step 1: Enterprise Leaders MindsetRough benchmark is at least 20% of time is spent on talent-related issuesMonthly talent reviews with business units are standard

59This is the subject of this module and extremely important to the success of the human capital plan

Stephen Covey talks about xQ or Execution Quotient as what is needed in organizations today. He says we dont need many more smarts (IQ) but better implementation of what we have. Its a nice play on an acronym to again highlight the criticality of implementation

Step 2: Process Building Workforce planning, competency development, performance management, talent reviews, leadership development, internal mobility, and career development



MetricsEasy and rightCritical few rather than inconsequential manyOne time and ongoingSummary and segmentedVisibility and action

Just because something can be counted, it doesnt mean that it counts. Albert Einstein

61Metrics are easier to implement than accountabilities in the R-R-A-M framework, and they are often the precursors to holding people more accountable for Talent Age behaviors.

But it is also easy to measure the wrong things, gather too much data and be swamped by data paralysis or have inflated expectations about finding the one great metric that will solve all problems. Metrics are really more about providing information so that more of right questions can be askednot finding quick solutions to the first set of questions asked.

The art of metrics is finding the critical few as opposed to the inconsequential many that could exist. By focusing on fewer rather than more metrics, the chances are greater that real action can occur. Gallup focused on only 12 questions; short term memory can process 5 to 7 items at once. Focusing on a few is better than being confused by the many.

With metrics, it is also better to think about continuing to measure the same things over time so you can track trend data. Go beyond summary data to segment by location, department, talent level and manager. Make a commitment to do something with the data that have been gathered. If better decisions and actions cannot be made based on the data, then perhaps the data should not be gathered at all.

Top Five Overall Talent MetricsSegmented turnover data Talent quotient (Hewitt, 2005)Readiness levels for key positionsSegmented engagement levelsNumber of strategic/critical jobs unfilledPercentage of inside vs. outside hires for leadership and critical jobs

62HCI has asked its members to identify the metrics that are most often tracked and reported. Reporting of human capital metrics to oversight committees such as Boards of Directors is now being done for more than 50% of organizations. The top five metrics tracked are:

1. Segmented turnovernot just a summary turnover figure2. Readiness level for leadership and key positions3. Segmented engagement levels4. Number of strategic/critical jobs unfilled5. Percentage of inside vs outside hires for leadership and critical jobs

The Hewitt measure of the Talent Quotient, which they believe will be widely reported by organizations within two to three years, is a segmented turnover measure. It is a ratio of A talent level turnover versus total turnover. If you are losing more A level talent than employees in general, this is not a good sign.

The ratio of internal to external hires for leadership and key positions varies depending on the health of the organization. For companies that are struggling, a greater percentage of outside hires is needed to infuse new talent and energy. If an organization is successful, then a ratio of about 75% to 25% internal to external is a good balance.

Step 3: The Guiding Coalition The responsibility for talent must be owned by the line and leaders at all levels

The members of the coalition must be highly regarded by both leadership and peers



Step 4: The Manager as Talent LeaderThe managers role is key in engagement, productivity and retention Recognition and incentives must be alignedManagers role must be aimed at optimizing and leveraging talentSignificant personal transitions must also be overcome for managers to be talent leaders



Step 5: The Employee as Initiator of Talent and Career DevelopmentEmployees start to drive conversations and action within a structureDemocratizing the process and personal brand buildingForces greater transparency throughout the organizationEmphasise with new generations



Talent Management Adoption Model

6666Another way to analyze a professionespecially a horizontal profession that supports the enterpriseis to segment the job into administrative, operational and strategic components. This can be done for IT, finance, marketing, and HR.

Administrative jobs often can be outsourced or automated. If jobs are relatively simple, repeatable, and process-driven, they should be accomplished through the most efficient means possible.

Operational jobs frequently require more complex skills and judgments, but may still be subject to greater efficiencies, including self-service centers, automation and partnering.

Strategic valuethe top of the pyramidis where the partner and player roles are evidenced. This segment not only provides the greatest value to the organization, but it provides greater security to the individual. It behooves everyone to want to play at the top of the pyramid. Consultants can be used to strengthen strategic capability (the Borrowing of the 6Bs); but HR professionals should aspire to providing this level of value themselves.

SuccessionMore than 88% of family firms choose someone from within the family, regardless of their ability to successfully manage the business

Lack of consideration of the successors capabilities is one of the primary causes of succession failure

Leaving the company means leader not only assuming their own mortality, but also letting go of power

To feel capable of relinquishing control, the owner has to have trust in the offsprings capabilities

depends primarily on the offsprings skills, previous work experience outside the company, and commitment to the company

Of businesses involved in family succession, only 30% are expected to survive the first generation

15% are expected to survive to the third generation

Less than 3% are expected to survive to the fourth generation

Individual factorsSuccessorLow ability of potential successorDissatisfaction/lack of motivation of potential successorUnexpected loss of potential successor

IncumbentPersonal sense of attachment to the businessUnexpected, premature loss of the incumbentIncumbents divorce, remarriage, or new children

Relation factors

Conflicts/rivalries/competition in parent-child relationship and among family members

Perils related to high consensus sensitiveness of the family business

Lack of trust in the potential successor(s) by family members

Lack of commitment to the potential successor(s) by family members

Financial factors

Inability to sustain the tax burden related to succession

Inability to find the financial resources to liquidate the possible exit of heir(s)

Inadequate financial resources to absorb the costs of hiring professional managers

Context factors

Change in business performance

Decreased business scale

Loss of key customers or suppliers, or deterioration in the relationship between potential successor(s) and customers or suppliers.

Process factors

Not clearly defining the roles of the incumbent and the potential successor(s)

Not communicating and sharing the decisions related to the succession process with family members and other stakeholders

Incorrectly evaluating the gaps between the potential successors needs and abilities

Failing to train potential successor(s).

Late or insufficiently exposing potential successor(s) to the business.

Not giving the potential successor(s) sufficient feedback about the succession progress.

Not formalizing rational and objective criteria for selection.

Not defining the composition of the team in charge of the assessment of potential successor( s).

Problems for children

Not being considered a viable successor, and experiencing conflict with non-family member employees

Parents continuing to intervene after retirement

SiblingsParents comparisons between siblings increase sibling rivalry

Inside the family hierarchy, daughters and younger sons tend to rank lower than the oldest son which can generate even more rivalry

The sibling rivalry problem can be magnified when an older brother works for the family business and the daughter acts against him for the firms benefit (e.g., reprimanding him for poor performance)

The daughter runs the risk of being accused of being disloyal to her own family, which is a no-win situation

SonsMales are preferred for succession even over first born daughters

Father-son succession is more harmonious, when the father is between the ages of 5060 and the son is between ages 2333.

Father to son successions are affected by issues related to control, power, and competition

Sons needs results in succession taking place too fast

Sons desire to establish their own identity leads to competition

Pressure to outperform the predecessor leads to poor decisions

DaughtersOnly 2% of daughters are likely to become presidents in family businesses

9.5% of family businesses report having a female CEO

Desire to protect them?

Women-owned family businesses are 1.7 times more productive than those run by men and are six times more likely to have a female CEO

Womens feminine qualities(conciliatory, attentive, supportive, cooperative) make them less hierarchical, more likely to take more time to make decisions, and more likely to seek more information on others opinions than do men

The female approach is seemingly well suited for family business management because they are more likely to attend to both the well-being of the business and the well-being of the family

Daughters get a double message from parents:

Produce grandchildren, but dont neglect the business

Recommendations for children involved in family business succession

1. Get an education (financial) and define your career goals prior to taking over the family business2. Find a mentor3. Gain experience at an outside organization 4. Have your own standards, not your parents standards5. Dont take over the business unless you feel a passion for it

Mothers

MotherFatherDaughter

Non-family membersWhen a nonfamily member employee assumes the role of second-in-command Feel threatened by the owners offspring in the business

Incentives must be offered to ensure their cooperation

Key employees must be notified of the succession by the predecessor

Shared vision for the future to establish succession planning

Nurturing/Development of successor(s)

Selection

4. Managing the transition process

5. Attend to family dynamics

Key take-aways

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