Succession and wealth preservation in the family business
By April Hall
The Yoh family has been focusing on two vital objectives: family success and financial security.
Day & Zimmermann (D&Z), the more-than-115-year-old Philadelphia-based company the family bought in 1961, today has 42,000 employees.
For the last 20 years, the company — which provides a variety of services, including engineering and staffing — pushed for true governance and formal succession plans, spearheaded by the former CEO, Spike Yoh, says Spike's son Bill Yoh. What his father set in motion, Bill adds, will guide the family into the fourth generation and help them to preserve their wealth.
Bill Yoh, a third-generation member, is chairman of D&Z’s $700 million international recruiting and workforce solutions business. He also leads the family’s efforts in business governance and succession.
When Spike, who remains chairman emeritus, retired in 1998, Bill and his four siblings bought D&Z. Bill says in the years leading up to the purchase, the family sat down together to establish core values. They found that the values of the family and the values of the business overlapped in many ways.
Bill writes about many of these family and business developments in his newly published biography of Spike, Our Way: The Life Story of Spike Yoh.
For instance, although Bill says Spike taught the sibling group to “circle the ranks against all others,” they also established principles to give the company’s advisory board and management power to make decisions in the best interest of the business.
“It is the whole idea of ‘run the business like a business and run the family like a family,’” Bill says. “There’s no way in heck we can do this without non-family business leaders.”
So, to protect the success of the billion-dollar company, the Yoh family has empowered the company’s advisory board to make hiring and promotion decisions involving family members.
To ensure that executives feel they have a stake in the family business, there is a phantom stock program in place. “It’s not actual equity, but the executives benefit from the success of the business,” Bill says.
In the original succession plan, family members who did not work in the business could not own company shares. Since the siblings took over the company, a brother and a sister, who has since passed away, sold their shares to the remaining three brothers. Bill says this policy will change with the next generation, allowing about a dozen family members to hold stock in the company. He adds that with the family’s current size, keeping up to date and getting together to discuss the business is relatively simple.
“You aren’t talking about 30, 40, 50 people running around,” he says. “Everyone is in the family assembly.”
Bill Yoh will share his advice on creating a family business wealth legacy at the Family Business Generational Wealth Conference in Coral Gables, Fla., Feb. 7-9. To learn more and register, visit the conference website.