How to earn respect when you take over

Start in the company's worst facility. Forgo the BMW for a Chevy. And spend hours and hours listening to employees.

By Tom Peters

Modesty, humility, simplicity. These are not just the traits of a good monk. They are also the essential attributes of a successful second or third generation family member who hopes to take over from a colorful leader one day.

There are many opportunities for a younger-generation president to become an effective chief. None of my suggestions will make the job easy, but they will give you a fighting chance to command respect — from family and nonfamily members alike.

Get experience outside the family business. The current chairman and CEO of Levi Strauss, Bob Haas, after he got out of business school, went to work for McKinsey & Co. as a consultant for three years. A lot of people would say consultants aren't real, but at McKinsey you don't get in the door if you're not talented, So Haas earned some real-world experience and proved that he could thrive on his own.

I know that cynicism runs deep in this world, and that many people may assume it was a little easier for Haas to get in McKinsey's door than it would have been for the rest of us. But without several years out in the world on his own, he would have had a much tougher time making it on his home turf.

Earn your spurs on the inside. I recommend finding the worst plant or distribution center in the farthest reaches of the company (Podunk, if possible), and putting in significant time there — like four or five years. Put your reputation on the line. The person currently running the company may be getting old and may be in a hurry for you to tackle general management responsibilities, so he probably won't think it's wise for you to spend five years in the boondocks before moving forward. But I think it's worthwhile anyway — for the sake of both establishing credibility and getting hands on experience.

Forgo the trappings of the first generation. Many successful entrepreneurs build themselves big, fancy offices. I think that's terrific, because everybody knows that the founder earned it with blood, sweat, and tears. For 200 years people have not resented entrepreneurial wealth.

But when you take over, you should not assume the big perks. Perhaps you can turn Dad's office into a training center or employee cafeteria and make your own office some 7-by-7-foot hovel with a church bingo table and a bunch of folding chairs. You have to reearn the perks.

If you have five great years, then maybe you can install some carpet. (Frankly, I'd counsel subsequent generations, determined to beef up management with nonfamily execs, to avoid the glitz in perpetuity.)

I would also work really hard at not flaunting the wealth. I'd do just the opposite. Few will cotton to a leader who seems to be living off the accomplishments of the previous generation or generations. I'd argue that the simple, understated lifestyle should start early. There's no need for a 26-year-old kid, who's vice-president and the eldest son, to be driving a $50,000 BMW, particularly if he's running the warehouse in Manchester Center, Vermont. Instead, suggest that he buy the cheapest Chrysler or Chevrolet he can find-and wear it out calling on customers. But if you don't do it for real — with a genuine sense of humility — then the symbolic part of it is a bunch of crap. If you are doing it for real, then the symbolic stuff is icing on the cake.

Maintain an open-door policy. Tradition has it that the old autocrat creates a great business; people swear at him behind his back and wish he would die — and then are terrified when he does. He huffs and puffs, and maybe he gives people money but he certainly doesn't allow them much ego involvement. The smart son, who's been to a business school like Harvard or Wharton, ought to act as if he is the first generation of professional management. That is, he should treat himself as primus inter pares on a management team. That doesn't mean "consensus management" but it does mean listening to others and taking advice seriously.

Those who are wise will spend the first four months of their tenure as top dog talking to the troops at various levels, asking them what needs to be fixed and then fixing a fair amount of it. Whether the former CEO/owner walked on water or not, every organization has a ton of small and big things that need fixing.

Moving into the top slot clearly calls for the skills of at least a Ph.D. in clinical psychology, particularly in family-run businesses. Obviously, over the long haul, the success or failure of any CEO will depend largely on the ability to deal with, motivate, work with, work through, and help other strong personalities. Whether you're age 27 or 77 when the old man dies, this is the crucial point at which to spend an insane amount of time with employees. Not so much on the golf course, although a lot of time there is probably called for too, but just hanging out, listening, and discussing problems.

Family members with zero sensitivity won't be able to pull off this open communication routine. In fact, maybe family members have lower odds of pulling it off than leaders in nonfamily businesses because they are perceived as having (and often have) gotten there by a less than meritorious process.

We might cringe at organizational politics, but in reality it exists in all organizations of more than one person. Generally people who make it to the top of somewhat sizeable institutions, for better as well as for worse, have developed pretty good political skills. "Political" has a negative connotation when it's translated to mean conniving, Machiavellian. But "political" is also a very beautiful word, It means the ability to get things done through large numbers of people who don't always share your view.

A lot of your dad's or mom's hired guns may have been chafing under the bridle as much as you have. Probably in two cases out of three, if you spend time with them, socially, you may very well find that their conclusion about that recalcitrant old guard is the same as yours, and that they probably came to it a long time before you did. But for the sake of putting their kids through college, they never spoke up and let the problem fester. The yes-man to your old man may very well be a maverick beneath his hide.

Decide how to handle the old guard. Some new CEOs decide they must categorically fire many of the old-guard managers who either will remain more loyal to the former CEO and his ways than the new leader, or will simply resist change. Is that the right thing to do? There's no best answer; you're damned if you do and damned if you don't. If you come in with a sickle and lop off heads, particularly heads that have been doing exactly what the former boss asked them to do for the last 25 years, you'll be called a jerk because you'll be seen as a spoiled brat, an ingrate, another capricious family member with no respect for outsiders. If you don't replace old blood with new blood, you'll be a jerk for not cleaning out deadwood: those mindless long-time employees who will stay loyal to the old man until he's been in the grave for 10 years.

I think it's important for a person coming into that situation to own up to the fact that on some planes it is a lose-lose situation. If you've got the cash flow and you're lucky enough not to arrive in the middle of a recession, my advice to new CEOs of privately or publicly owned family firms is exactly the same: Break the bank to give people generous early retirement programs and make it difficult for them to scream. Make it very comfortable and attractive for people to "voluntarily" choose to go out the door.

There's another point. My colleague, Jim Kouzes, and his coauthor, Barry Posner, single out credibility and trust as the most significant attributes of effective leaders, in their upcoming leadership book, The Credibility Factor. If you go in with a new broom, you have to be sure you're perceived as having been fair to the people you're getting rid of. You must be seen as having followed due process, and then some.


Tom Peters, is coauthor of three bestselling management books, including In Search of Excellence and Thriving on Chaos.