But Dad Said I Could!

Dealership succession can be a touchy issue. But it needs to be addressed.

The biggest mistake dealers make is in ignoring the issue of planning who will ultimately take over their businesses.

Most dealers recognize intuitively that succession involves a multitude of complex issues.

Many dealers are unwilling to address known issues, particularly if they involve family issues. Other dealers are unwilling to open up a can of worms. The attitude is: “If don't know what the problems are, I don't have to deal with them.”

When addressing succession, a dealer may face disagreements from a spouse, children, managers, manufacturers and possibly banks.

That besieged dealer will often reply, “It's the kids' problem, I'll be gone!” Unfortunately, so too might the business.

For those with the courage and conviction to address succession, the reward is knowing that one's life's legacy will continue.

Let's look at one of the potential problem areas — offspring working at the dealership — and what can be done to make that situation an asset, not a liability.

Without planning, junior or sis often enters the business because they are family, not because they are qualified. No criteria has been set for education and experience levels. Once they enter the business, expectations are not defined, just assumed. Training is often hit or miss with no specific plan for how to fully prepare for the job of succeeding the parent at the dealership.

In that haphazard situation, it is no wonder that at least one son or daughter will enter the business simply because they are members of the family club.

He or she may not be able to get or keep a job at another dealership. But the thinking goes: “He's our son and we have to give him a job.”

Often, with no set criteria for accountability, he or she will be allowed to work on a less structured schedule than that allowed other employees. Entitlement often sets in. That's the death knell for developing trust and respect with the other employees.

On top of this is the common occurrence of overpaying the offspring because “we want our child and grandchildren to enjoy a better standard of living.” This can clearly affect employee morale.

So what are the solutions?

First, establish a family-business employment policy in writing and have family members sign it. This will establish the basis on which each family member will qualify if they want to work at your dealership.

This will help you make the right decisions when confronted with job-seeking children, in-laws, nephews and others who are not qualified.

Second, define your family-business employment expectations policy in writing and have any family member who comes to work for you sign it. This should be available to all managers so that everyone knows what you are expecting of family members.

This policy will include whether or not they have to start at the bottom and take the stairs vs. the elevator to the top, what hours and productivity are expected for promotion, training requirements, etc. Usually the more detailed, the better.

Third, establish a five-year (or more) training curriculum carefully designed to meet the needs of each family member.

This curriculum should be developed in concert with key managers who will be participating in a structured mentoring program. Key to this idea is that you are looking long range toward the succession of your dealership and are preparing your children to be able to take over when the time comes.

In future articles, we will explore other areas that must be addressed in order to improve the odds that your dealership will experience succession success — the ability to have the dealership succeed through the next generation.

Few people like to think about their own mortality. One dealer told me, “What I do is fun, what you do is not fun. So I'd just as soon avoid it. But if I am going to deal with it, I will need you to push me to address all the issues.”

In the fast paced automobile world, it's easy to see why dealers put succession on the back burner, either dreaming or envisioning, but not planning.

Hugh Roberts is a partner with The Rawls Group. He is at [email protected] and 818-610-3480.