Dr. Merlot and I met up during a layover in Charlotte in route to a family business operating three semi metro dealerships in the Midwest. In our previous visit, we had been dealing with a daughter with a drug issue. Now we were focusing on preparing the dealer’s son and other daughter to be approved as successor dealers. We arrived at a small airport, and began the short drive to Marge and Bill’s dealerships that they received from Marge’s dad.
“Good morning Marge,” the Dealer; “good morning Bill,” her husband of 37 years and the Service Director. “Trust you have recovered from the stress of our last trip? How’s business? How’s Cindy doing in rehab?”
“We are doing about as well as expected,” responded Marge with measured enthusiasm. “Business remains decent and the family is doing ok as well.”
“Cindy dropped out of rehab,” blurted Bill. “She convinced me she can do it on her own.”
I was shocked at this news. “Is she still in Indy living with her ex-boyfriend?”
“No, she’s here writing service,” responded Bill. “You know we hate that guy. Marge is bunking with her at the townhouse to help her stay away from Michael and the meds.”
“Your drug addict daughter is working in service!” Doc proclaimed in disbelief. I quickly gave Doc a ‘zip-it’ look and he appeared to swallow his disbelief.
Feeling a need to explain Bill continued. “We couldn’t let her stay in Indianapolis. We needed to get her away from that loser and make sure she stays clean.”
While Doc ran his fingers through his hair in disbelief, I acknowledged Bill’s good intentions and encouraged him to complete the update. And then as planned we reviewed profiles of a suggested shareholder’s agreement and real estate operating agreement. As we finished Marge inquired, “Loyd, since I own all the stock and real estate, please tell me again why I need a shareholder’s agreement?”
“Sure” I responded. “You and Bill plan to direct ownership to your three children, who do not get along. Therefore, you need to establish these transfer restrictions and buy-out terms because, assuming their relationship does not improve, your children will never be able to achieve agreement. Both Cindy and Alex openly resent Susan and will not agree to impose restrictions upon themselves. My guess is that Susan will be so frustrated she will either quit or agree to split up what you want held together for the betterment of the entire family.”
Marge pondered my explanation a moment. “OK, I get it. My three kids couldn’t agree on what time to eat lunch therefore I need to impose rules as to how they work out their disagreement. This could work if we are not around to let them off the hook,” she concluded with a smile.
“If they don’t want to play by the rules, no one will force them to be an owner. They will just be bought out. Trust me, Cindy and Alex will get over the disappointment that they cannot do as they please and Susan will be profoundly thankful. Doc and I are going to visit with Susan and Alex this afternoon and we’ll plan to see you tomorrow morning at breakfast to discuss their reaction to the suggested rules of engagement and Alex’s development issues. I recommend we do not discuss this with Cindy until she demonstrates she can whip the prescription meds.”
We proceeded up the street to the dealership where Susan worked. We had a great meeting with an impressive Successor Candidate who had recently completed the NCM-Rawls Dealer Executive Program and was hungry for anything to advance her knowledge. She was very grateful that we were suggesting a shareholder’s agreement. Her biggest concern was how she would get along with her brother and sister who she contended were both experts in excuses.
After our visit with Susan we continued to their third store where Alex contended he was the GM. Doc and I found their oldest child where we left him, behind his desk shopping online for fly fishing equipment. “James, how’s it going?” I asked as he greeted us.
Based upon our prior phone calls he knew the agenda. After a few more awkward pleasantries, Doc got to the point. “Before we discuss suggested documentation, to follow up on our phone conversation, which option do you prefer, engaging a management coach or enrolling in the NCM-Rawls Executive Program? Your sister says it is a terrific program.”
Alex was an emotional bully so he had no stomach for patty-cake. “Do not waste your time,” he asserted with visible frustration, “Neither! “As I explained, I don’t want someone in here telling me what to do and I am no good at school. And if the Ole Man doesn’t like it, I’ll buy them out of this store; I’ve got backers with money.”
Doc and I knew Alex was very stubborn but his intolerant response put us both back in our chairs. After a long awkward pause, Doc apparently was ready to tango with the bully! “Alex, do you really think the manufacturer will approve you as a dealer? You will not let the factory rep in your office, you cannot read a statement, you are nowhere close to market effective and you are earning 1.25 net to sales! Dude, I have seen optimism but your assumption that you would be approved as a dealer takes the cake! In the world Loyd and I work in, your dealer app would be classified as a bad joke.” After a short pause, Doc continued in a softer tone, “Don’t you understand that we are trying to help you? Who is to say your Dad will sell this store to someone who has no interest in improvement?”
Alex’s face had been growing progressively more red. It was becoming apparent that we had pushed him over the edge. Putting both hands on his desk and indignantly extending his head over the desk he asserted, “My dad has said that this store will be mine! You have no right to challenge my dad’s plan or disrespect my management ability. I don’t have to listen to your ridicule! I think the two of you should get your succession planning mumbo-jumbo out of my office.” Both Doc and I were frozen with shock regarding what he had heard. After a very awkward pause he stood up and continued, “If you don’t leave, I will.”
Disoriented by the tantrum, Doc and I abided by his ultimatum and humbly retreated to our hotel. While Doc medicated his pride with a couple glasses of Merlot we discussed our meeting with Marge and Bill the next morning.
Refreshed by an evening of rest we greeted Marge and Bill for breakfast at the local ‘deep-fry.’ “How was your afternoon?” inquired the ever-talkative Bill.
“It had its high and low points,” I responded. “Susan was a delight. She is a very impressive young lady. She has a very promising future.”
“That’s nice of you to say Loyd. If Susan was the high point, I assume Alex was the low.”
“Well, I must admit, he was quite the challenge. We never got around to the shareholder’s agreement. His response to our management development plan was not a surprise but his confidence in his rejection of our effort to help him was shocking. You cannot see the bruises but we took quite the whooping.”
Then Doc offered a joke “there are many who would have paid to watch your son whale on me like I owed him money.”
Bill did not laugh. “Are you kidding with us?” responded Bill. “Oh my! I am going to put him in his place. I am going to…”
Dr. Merlot held up his hand and stopped Bill in mid-sentence. Visibly frustrated from the prior day’s experience, and the prospect of hearing more of Bill’s bad-ass puffery, he was ready to say his piece. “Hold on Bill! I think I have heard what you are going to say before. The only place to put Alex is adulthood! You are not going to win a battle of words with that 38-year-old man acting like a 13-year-old. All of this bark and no bite has got you in a position where your son is telling you what he’s going to do and what he’s not going to do with your business. Here’s a news flash, Alex is not the problem. He is not the reason your franchise is on probation. You have enabled Alex to act like a child and by doing so you have not equipped him for success. By the looks of things, he could be saying the dog ate his homework, when he’s 50 years old! Bill, its time you were put in your place. You are the problem. We cannot do anything about Alex’s attitude until we do something about your behavior.
Bill’s eyes expanded to the size of quarters. The ever-gregarious lip-whipper was about to mount his defense when Marge put her hand on his shoulder and raised her finger as to say, “Hush!” After a powerful pause, she pleaded: “Bill, for once would you listen? Dr. Merlot has nailed what I have been trying to tell you for 20 years.”
She then looked over to Doc which he interpreted as another opportunity to launch. “Everyone in this organization and especially Alex knows, that you will bark but you will not bite. Alex therefore confidently believes that he can do as he pleases, and he does not want school or coaching. If we had brought up the shareholder’s agreement he would have probably told us to stick it where the sun does not shine. Entitlement in Alex is not the manifestation of some emotional malfunction. He has simply accepted the concocted expectation that you have presented to him; that he has a right to be a dealer, to be an owner. But I am the bearer of bad news, entitlement is a fallacy. Entitlement is a propagated fantasy, without substance that is destined to collapse in the face of reality.” Doc, paused creating a deafening silence. Then he gave ‘em the ‘heater,’ I would contend that Alex’s handicap is as bad as Cindy’s.”
“There’s no way!” challenged Bill. “Cindy’s a drug addict!”
“Alex’s an entitlement addict!” responded Doc who had lost all reservation about talking straight. “Your appeasement, your toleration of his assumption that he can run a dealership, that he would be approved by a manufacturer, that your employees will follow him; are setting him up for a calamity that will inflict pain on everyone associated with your dealership. If you are alive when this happens I assure you that you will be heartbroken. You do not need to speak with Alex about disrespecting us; you need to man-up and be his father, not his daddy. And ditto regarding Cindy,” he quipped. “Who wouldn’t bail out of rehab and come home to a job, a townhouse and a nurturing daddy.”
“Yes Sir!” sighed Marge leaning back in her chair. She then crossed her arms and cracked a little smile of respect. “Dr. Merlot, I was wondering how you were going to fix our dysfunctional children. Now I get it; It’s us that needs fixing.”
Author: Loyd Rawls
Loyd H. Rawls, President/Chairman of The Rawls Group, has specialized in succession planning for closely-held, family owned businesses since 1973. Well respected in his field, Mr. Rawls is a highly requested speaker and has published numerous articles and publications on this subject such as “Seeking Succession: How to Continue the Family Business Legacy” and “The Succession Bridge: Key Manager Succession Alternatives for Family Owned Businesses.”