- Ideally, the likely transition is happening years before the actual event.
- It is a good idea for incoming generations to have a high profile in their markets prior.
- Make the transition a formal contract, not just a conversation.
- Company founders can still make a valuable contribution by being the face of the company.
- Patriarchs or matriarchs should step out of the way completely if their presence is causing confusion.
At 32, Natalie Rowe, the brand new team leader and broker-owner of Re/Max Advantage in Michigan, already knows that managing agents can be like “keeping frogs in a wheelbarrow,” as she puts it.
For the past five-and-a-half years, she has been on a succession path with her father, Al, a well known figure in the market.
The news that she was taking over from her dad was announced to their community on December 30 on Facebook.
It wasn’t a shock to anyone. Al just turned 70. The pair had informed their agents of the plan to handover more than five years ago.
The brokerage currently comprises one office and 39 agents. It’s early January — what has changed?
The father and daughter have swapped offices — she now has the biggest, he the smallest — and he is not retiring yet, just easing off a bit.
For all her youth, Natalie has been smart. She has strategically raised her profile in her community in the run-up to her succession — she was recently president of the Greater Kalamazoo Association of Realtors for two years.
“It was very strategic to be president — you need to be out there,” said Natalie.
She is currently meeting with her agents to help them with their 2017 business plans. She wants to help solve their problems and set realistic goals.
If Al ever does leave entirely, she will lose her tech ideas guy, but Natalie said she is fortunate.
The office is not far from the main Re/Max Michigan corporate office, which has its own IT director. She knows him and his wife; they are a similar age and they catch up regularly.
And Al is very much still there. Working in her office on the Monday public holiday after New Year’s to do some planning, she received a text from him: “Do you have any tasks for me today?”
“He’s not going anywhere; I can rely on him as counselor and mentor,” she said. He’ll never retire.
Family-owned businesses are the engine of the economy
Mike Staver, coach, speaker and chief learning officer for the Leading Real Estate Companies of the World (LeadingRE) led the group’s first family business succession workshop last year. Approximately a quarter of LeadingRE companies are family-run.
Family-owned businesses drive the economy, so the transition from one generation to the next should be handled with care, he said.
As Real Trends’ Steve Murray says, the great majority of brokerage firms, whether independent or franchised, are privately owned. And all but three or four of the largest are privately owned by individuals or families.
There are two sides to effectively planning the transition from one generation to the next, said Staver. One is the art side, the other is the science.
The science side is the valuation, wills and trusts.
The art side? “The three things I coach on is: what is the impact of succession going to have on the culture, what will be the impact on the people, and the impact on the business.”
If any of those three legs of the stool are cut short, it can destabilize the company and create a lot of disruption, warned Staver.
He sees a lot of real estate owners underestimate the impact of succession on the culture and the employees, especially if the big personality of the founder is hard to replicate in the next generation.
The coach also finds that there can be an oversimplification of the handover process. “When we did the workshop, I was shocked at how many people across the industry and network, think of this as a will and a trust situation and it isn’t.”
The family dynamic can often lead to a denial about the desire or capability of the next generation too, he added.
“I am working with a brokerage right now where the founder wants their kids so much to be a part of the business, but I know for a fact that at least least one of the kids has no desire but is being paid so well they are kind of being held hostage,” he said.
His tips to broker-owners wanting to build a family business for generations: make a formal plan, draw up a contract, don’t just have a conversation.
And give it plenty of time — people often wait too long.
Also, make sure that your kid is working from the ground up in the business — otherwise you won’t do them any favors. They will appear entitled.
The responsibility of a smooth transition for agents and staff
In the case of Glenn “Chip” Gardner and Crystal Gardner-Phillips, fourth-generation family members of Gardner Realtors, a company with a $1.2 billion sales volume based in New Orleans, they both worked outside the business earlier in their careers before deciding to join their parents, Glenn and Sharon, at the family business.
Chip, the company’s VP of operations, who has an MBA in real estate, brought investment banking experience in commercial property to the business — he would like to make the commercial property division as big as the residential side in time.
Crystal, worked initially in fashion wholesale, then started in a marketing role at the family firm. As VP of marketing and public relations these days, she has become passionate about tech and consumer service.
She said: “The one thing I really admire about my dad is he never pressured us to become part of the family business. It had to be our decision; it would have to be the right fit for the business.”
At this point, there is no plan for them to fully take over — they work alongside their parents.
Said Crystal: “I know we bring a lot to the table, but we have so much to learn from the previous generation, it is such a balance. We make a really great team; they are learning from us, and we are learning from them.”
In the family, they say, no one ever retires.
“Our grandmother was handing out business cards in the nursing home,” said Crystal.
Chip, who did the family succession planning workshop with LeadingRE in 2016, said one big takeaway from it for him was to call it “continuity planning” instead of succession.
“It’s not just about the family; it’s bigger than us,” he added.
Smooth family continuity between generations not only affects the company’s 70 employees, whose families rely on their jobs, but also its 800 agents, he said.
You can’t have two chiefs
In many cases, when the handover is done, the family patriarch or matriarch stays on in some way or another.
That’s fine for a while, but if staff and agents are using it as an excuse to keep going to the former president for answers, then it can become a problem.
Leesa Harper Rispoli — who attended Realogy Ascend: The Executive Leadership Experience, a 46- week course, last year — nipped this early in the bud when taking over last June from her mother, D’Ann Harper, founder of Coldwell Banker D’Ann Harper in San Antonio.
As D’Ann describes it: “Leesa came to the house. She said: ‘You and Daddy always taught me that there could only be one chief and everyone else was an Indian — you and I both can’t be the chief.'”
So D’Ann has learned to say when approached: “Can you talk to Leesa?”
“I’ve had to learn if she is going to have the responsibility, it can’t be in title only,” she noted.
Leesa and D’Ann have seen the handover done badly with another mother-daughter brokerage in their market.
“The daughter started firing people — we benefited from it because we got a lot of their agents,” said D’Ann. She told Leesa that if she wanted to replace someone, to do it later, once she knew what that person had to offer — and not to earn a reputation as a hatchetperson.
As Leesa sees it: “My role is to project the vision forward, to make it better, not to come in and change things if nothing is broken. It’s to make things better, polish, take the company into the 21st century; that’s what I see my role as being,” she said.
The company president is opening a new office in San Marcos, and she is launching a fully branded luxury division, encouraging the luxury agents to lead the way with their ideas.
Never too early to plan the next succession
The advice from Mike Good, executive champion of the Realogy Ascend course and chairman emeritus of Sotheby’s International Realty, is that families don’t want to turn a handover into an event as you would an acquisition. They are better off making it to seem like a “natural flow”.
And this is what Ed and Mike Prodehl have managed to achieve at Coldwell Banker Honig-Bell in greater Chicago, with its 49 offices in Illinois and Wisconsin. They speak about their process to the Ascend course students.
One thing Mike has learned from Good, meanwhile, is that though you may talk internally about a succession plan, it shouldn’t be shared publicly unless you are committed to it.
In his mid-forties now, Mike took over from his father, Ed, two years ago as president, Ed becoming chairman.
Mike also has three sisters working in the business, the two elder ones in senior positions. It was always known that Mike was the one who was going to step into his father’s shoes.
Mike and Ed have worked side by side for the last 21 years. As Mike puts it, he has been attending “the school of Ed,” working as an agent for eight and in management after that.
They knew what they didn’t want to happen with the handover — any uncertainty about the succession plan. They had seen instances where the succession had not been announced, then the father or mother passed, and the company was not aware who would be in the new top role.
“It created some issues,” said Mike.
Ed said as chairman, he is taking less of an active role in the company, in the office three days a week.
Mike points out Ed still holds so much value, and all decisions are run past him. “The majority of agents are with the company because of Ed and his personality — seeing him around, him being visible, is crucial.”
Ed is aware that real estate is a different world today and is happy for Mike to be handling these challenges.
And they have already talked about succession for Mike.
“It’s never too early…My nephew came into the company four years ago and he has got one of most successful teams already. He’s a people person,” said the proud uncle.