Family
Business Magazine E-Newsletter
October
2, 2007
Contents
1.
A non-family successor at Casio?
2.
Successor makes controversial changes at small-town paper.
3.
Temp
workers a budget line item at more companies.
4.
Aligning your compensation and business strategies.
5.
Cardinal rules for strategic expansion.
1. A non-family successor at Casio?
Kazuo Kashio, the 78-year-old president of Japan's $5.2 billion Casio
Computer Co., says he would consider choosing a non-family successor,
although each of the four Kashio brothers who founded the company 50
years ago has a son who works at the company, the Wall Street Journal recently
reported. "The job needs to go to the most capable person," Kashio told
the Journal. "If a Kashio
could do the job, that would be great, but if he doesn't have the
ability, then it can't be helped." Kashio plans to retire when Casio
achieves a 10% operating profit margin, which it aims to achieve in the
fiscal year that ends in March 2009, the article said. "Typically,
founding families in Japan have been forced out of management only when
things have gone terribly wrong," the Journal
reported. (Source: Wall Street
Journal, Sept. 10, 2007.)
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2. Successor makes controversial
changes at small-town paper. In the year since the death
of founder John W. Chase, his daughter and successor, Carla Chase, has
made controversial changes at the North
County News, a weekly paper serving New York's northern suburbs,
according to a report in the Lower
Hudson Journal News, a local daily. "The perception cited by
many was that the paper had lost the edgy approach and independent
mind-set that had been its hallmark," the article said. More than a
dozen longtime employees have left the paper, some involuntarily, the
article said; turnover had previously been low. " 'It's not my father's
paper' became the byword of Carla Chase, 53, who adapted management
concepts promulgated by her second husband, Frank J. Rich, a business
consultant who now writes a column on workplace issues and
organizational behavior," the Journal
News reported. Bruce Apar (who was once a "citizen journalist"
for the Journal News) was
named editor of the North County News
nine days after John Chase's death and demoted former editor Rick
Pezzullo, who resigned in January, the article said. Among the many
newly instituted personnel policies are "goal sheets," motivational
e-mails, a dress code and opening of staff members' mail by management,
the report noted. Editor Apar told the Journal News that the North County News "was making
modifications and improvements in a number of ways to make it 'reader
friendly and useful to the community.' " (Source: The Journal News, Sept. 10, 2007.)
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3. Temp workers a budget line item at
more companies. The use of temporary workers -- once
viewed primarily as a stop-gap measure -- today is included in the
long-term plans of many companies, according to a survey by Office
Team, a staffing service in Menlo Park, Calif. Seventy-one percent of
150 executives surveyed said temporary workers are now included in
their overall human resources budgets.
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4. Aligning your compensation and
business strategies. "Well-managed companies constantly
strive to align compensation policies, procedures and programs with
business strategy, organization design, stakeholder interests and human
resources requirements," write Lance and Dorothy Berger in The Family Business Compensation Handbook.
"The key to designing a compensation system in a family business is
rationalizing the family member premium and articulating it to the
company." They offer the following tips:
- Rationalize
and communicate the pay system based on strategic, organizational and
human resources requirements.
- Reconcile
the roles and goals of family member, shareholder and employee.
- Implement
a credible succession/replacement system.
- Develop
and implement a valid employee pay premium system.
- Ensure
that family members legitimately designated as having senior management
potential are accelerated to the appropriate positions and receive the
appropriate pay premium.
- Ensure
that family members who can't achieve high performer or high potential
status receive equity in the company and move aside.
For details,
see The Family Business Compensation
Handbook. Learn more about the book and view the table of
contents here.
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5. Cardinal rules for strategic
expansion. "For most family business owners, who will
likely make only one or two acquisitions over a five-year period, the
margin for error is slim," writes financial adviser Brad Bulkley in the
current issue of Family Business
Magazine. He offers some guidelines for designing successful
acquisition efforts:
- Buy what's not for sale. Seek out
targets that serve your strategic goals rather than reviewing only the
companies that happen to be in the business broker's current inventory.
- Establish very specific criteria.
Develop a strategic plan and define the role to be played by
acquisitions within in (not the other way around).
- Avoid "deworsification." Don't
diversify the business simply for the sake of doing so. Look for
opportunities to enhance your market position and avoid the trap of
spreading yourself too thin without reason.
- Seek situations in which price is not the
only determining factor. Better values are to be found when the
transaction meets the seller's non-cash needs.
- Focus on acquisitions that will have a
meaningful impact. Purchases should add to the value you are
providing your customers and have a noticeable positive effect on
earnings.
- Never bet the ranch. No deal is
worth risking the base business.
- Culture is as important as economics.
Ensure you fully understand the culture of the target and how it
compares to that of your own company.
- Sellers should share the pain. If
possible, make sure the former owner has something at stake as you move
forward. This might take the form of a continuing minority ownership
interest or seller debt that is assumed as part of the purchase price.
- Don't expect smooth sailing. Every
transaction will fall off the rails at least a couple of times before
closing. The lesson is not to overreact but to have contingency plans
at all times.
- Keep your options open. The best way
to keep leverage on your side is always to be willing to walk away from
an opportunity. Maintain flexibility and wait for the right deal on the
right terms.
For more
information, see "A few cardinal rules for strategic
expansion" by Brad Bulkley in the Autumn 2007 issue of Family Business Magazine. Visit our website
for subscription information.
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