I have written several blogs on the importance of succession. And let me repeat myself with a story. First the statement - if you own a business or a leader of any type of entity where there is a management function, you need to have a succession plan for when something happens. What happens when you die, who takes over? What happens if you have an addiction problem and you must go into rehabilitation for months, who will take over? What happens if you just want to leave the company or organization, you want to go out and explore the world, who takes over? We could come up with a lot of what happens but let's talk about a story that I saw when I first started out in business with one of my clients. Examples are the best way to learn. Experiences have taught me so much in these last 37 years in business.
I started my firm on the basis that I would take on projects that no one else really wanted to do. One of my first clients was for a man that I had known about in Co-generation power plants. I had sat down with him before when I was with another designer builder company of co-gene. ion power plants out of Finland. Took on this client on because I knew of this guy and my experience as a project administrator of building these huge facilities, as well as operating them, was my cup of tea. I like working with people with good reputations and have built things before. If you ever see my posts about on social media, I am always telling people, don't show me your bling because what impresses me is what you have built. I preach that a lot and I believe in it. This was a start-up company and had two sets of offices on two floors. The owners were up on the floor above us and all of the support individuals, which included me, was down on another floor and my desk was in the hallway. They have purchased two co-generation power plants and wanted me to consolidate the financial reporting and to work out the contract relationships with the power companies purchasing the power and the box company purchasing the steam to make cardboard boxes. My other role was to report to the investors who had put money or funded the purchase of the power facilities. The company was doing well and took one full floor in La Jolla California, we watched it being built. Marble floors, private dining rooms, everyone had an office, a huge board room. At my early age I was impressed. The day finally came when I moved out of the hallway into my own office. The company was out and buying other co-generation power plants, different managers came in and out. In a start-up people change a lot because the need of the company changes as it grows. Now, let us get back to the founder and his story. The founder decided to hire an individual who he had gone to school with at a prestigious university. The new man came in and started to make some changes without talking to the founder. People in the office started to not trust this individual, he was not experienced in the industry, and he seemed a little shady. At Christmas time we had the big party at his home on the hills of La Jolla, beautiful event. I noticed that the founder missed most of the party because he was, well let's just say it, plastered. I am the type of individual that watches and listens, so I know what is happening within a client firm, and what I saw was not good. After Christmas the founder went into rehab to fix himself. While he was in there his friend took over. Within two weeks after that he forced the founder out and took over the company. A year later the company closed because of mismanagement. A succession plan was not in place. An individual took over that had no experience in the co-generation industry. A succession plan should have said, that in order for the company to go forward without the founder that an the replacement needs to have x-y & z, that the individual is monitored by the board or outside management advisor, and that when businesses started to go bad that a decision should have been made to adjust the company and the management of the company. Succession plans could have saved the company because the friend would not have taken control. Lucky for me my contract was finished, and I had accomplished what I was hired to do. However, the investors were not happy because the projects were pulling so much money out of the projects that the investors were not being paid. One afternoon the biggest investor of all time flew in from New York with his team of attorneys and finance people. You would know him if I told you and you would also know that this investor meant business on everything he did or touched. They walked in, were put into the board room and then I was asked to join them. Then the Vice President of Finance was asked to join them. The new guy who took over the company went into hiding. So that was the day that I became the mediator between my client and the investor. We worked out a plan, we set some objectives to live up to, and we parted our pays. The biggest issue was the management fees that the owners had been taken and that became reduced and frozen. When an investor just shows up with his attorneys and finance people you know there is a dispute that needs to be resolved. My contract was up, I did my duties, and I went on to another assignment. However, the guy who took over the company ran the business into the ground. The investors took over the projects and the founder had nothing. Succession, and the role of management is everything when it comes to their leaving for any reason. It must be thought out, planned, announcements made, investors communicated to, bankers told of the new management. It must be in writing and reviewed by a transition team from time to time. It also takes place internally to identify who has the talent to lead, do they have the experience or training, HR needs to be involved with all aspects of it or hire an outside mediator to sit down with management and HR to go through the structure, strengths, and weaknesses, and write a formal plan. If you have not done it, do it because it is vital for the survival of your business and make sure there is a leader who can lead instead of trying to take over the company. I do not know if you have been watching the HBO series "Succession". Good show and in family or publicly traded companies, the succession can go crazy as displayed in the show. So, plan well for the succession of your leaders and owners. #mediation #successor #business #businessmediation #disputes #ADR #smallbusiness #Wallstreet #leadership #management
One mediation story that I always tell is about a start-up business with the members went greedy. Greed plays a big part sometimes in business mediation when partners just don't get the concept that they need to work together and just because they think they are working harder than everyone else does not change the fact that you are in business with other people. The business is not about you, but rather it is about the company as a whole. Ego can set off greed that sets off the destruction of a business.
Several years ago I had two young men that started a healthcare supply company. Both worked hard at the business, they got the company certified by the Joint Commission on Healthcare, they are all the products distribution lines in place, they opened a warehouse, and they started to work with medical facilities. They did all the right stuff. However, they needed money to buy their inventors, so they needed a cash infusion, and the best way was to get investors to help the growth. They found seven individuals that wanted to invest so they put in their money because they trusted these guys and saw what they had done. The two guys continued building their brand and business. However, there is always a however to a story. Some members of the seven got the greed bug and plotted to take the business from the two guys. The investors saw the success and started to make demands and wanted to get involved in the day-to-day operations. They started to stir the pot and greed between the other members. Probably the most unprofessional group of individuals that wanted to take over. Now in healthcare companies it takes time to get your certification, get the approval to bill medical or Medicare, and then you must go through steps before you can make any money. The two founders were just about there to start billing out after all the work getting these various certifications and approval levels. The investors started to create trouble internally and it had to be stopped before they could go forward. They came to me with their problem, and it was something that needed to be mediated or present an offer to pay back all the investors and let them walk away. On a Friday afternoon all of the partners and the two founders went into my board room. I let each investor have their say, I listen carefully, and their true story came out. It was not an ethical story. I left the room with the two founders and drafted an agreement to terminate the investors’ role in the company and return the funds to the investors. We went back into the board room, and I let both founders have their last word and present their offer. Each one accepted the offer, of course with a lot of angry words, but it was accomplished, and the partners left. The agreement was signed, and the monies paid out. Investor’s greed ended a potential profitable relationship where they could have sat back and watched their money flow to them. Instead, they chose a greedy route that ended badly for them. Mediation is the best way to resolve conflict in business disputes. The open and structured communication process provides a way to tell the story of the dispute, organize a negotiation strategy, and to put option on the table that is fair to the other parties in the mediation. I love the process of mediation. My role is to listen, counter their negotiation arguments with other approaches, and to get to an agreement that can be signed, and all parties can move forward. It is much cheaper than the court system, it is faster and less abrasive, and the parties come to an agreement that works. If you have a business conflict, or a heavy-duty dispute, call my office at: 305.824.2966 or email me at info@lodge-co.com #mediation #business #disputeresolution #ADR #usiness #smallbusiness #conflictresolution #mediation #palmbeach #LA #miami #orlando #nyc #leadership #Wallstreet #SanFrancisco #dispute
Every morning I get up and write in my journal and a client popped into my head. Funny how that happens, when you wonder what ever happened to a client after you have worked with them for while. But then I thought, it was a learning experience for me, the experience taught me a lot about clients and their thought process in business.
I had a client that owned a tool and die company that made specialized healthcare parts for medical devices. They were doing a fantastic business and were expending. But then something happened. By the way this was a husband and wife business, that is stressful just because of that issue. They came into my office (I really miss my office) and wanted to talk about their business. Business had dropped and they didn't know what to do. The husband wanted to get a boat, go out and go fishing. He also wanted to move the business to a further location. His wife was upset because he wanted to do all of this new stuff that didn't create business. And, he wanted to design a watch and sell it. So there was conflict in the relationship and the business. Plus, he decided he wanted to sell off the business and he thought he had a buyer. This client needed help and redirection. As we went through their financial statements of how they had been running, I started to ask questions to find out what was going on. The more we talked the more it became known that he had lost a big client and he didn't know what he was going to do so he just wanted to run away. I mean, most of us in business have wanted to do that, buy a boat and sail the world, forget all about the problems in the business. Some of you want to become dancers instead of lawyers, but that is another story. There was good news for this couple and the business, that they couldn't ignore. They had a good business, they produced really good stuff. We put together an action plan that said they could go out and get a couple of clients to change out the old client he had lost. We could work on reducing expenses and improving cash flow. He then saw the value that he had built and agreed he would follow the action plan. He just needed a kick start, a reminder, a review of what he can do to continue building and to move forward. I scheduled for them to come into the office in two weeks. When they came back they had gained two new clients and were excited. Sometimes you have to sit down and get another point of view when you are thinking about kicking the business down the road. There comes a time when a good adviser is needed to ask the questions and get an action plan in place so the company can live one. Defeat is not the answer when you have a good company and you leave the company to deal with your emotional issues just because of one client. In my business, when a client has left they have always been replaced with two new clients. The reason why that happens is because a negative clients brings in two positive clients and you get refreshed and move forward. My client worked on his business and the last time I checked they were still doing well. I told him, if you really want to sell the company he needs to build it up and then sell it off. Money in the bank. But my question is, did he ever get the boat?
Making Good Decisions On Bad Clients: When you have a firm, you are always looking for clients. Especially those that pay. But there are times when we make errors in taking on clients. Several years ago, I had a client that was a top boxer in the industry, Well over $100 million in fight money. However, I never wanted him as a client, but my staff wanted him, and they went after him as a client. I knew the problems that come with the boxing industry and there were problems with this client. Contract and pay per view issues, and more. For some reason he went with our firm and the moment he signed his agreement with us problems started. This client ended up costing me money because I had a staff of 5 trying to take care of his needs and responding to the needs of the of various entities. The problem in boxing are the people around the boxer. Everyone is there to see what they can get out of the boxer. This boxer cost me time and money when he ended up not paying me for the services and it went into arbitration. My lesson was go with your gut, don't take on clients that will suck your company dry of fees and valuable time when you could have had clients who pay. Is it exciting to have a high-profile boxer? No, because you are sitting there during a fight hoping he will pay you from this multimillion-dollar fight. You never knew when someone would try and pick a fight with you. Would I do it again? Probably maybe, but in an advisory role with rules on payment. What you have to learn the hard way. Go with your gut. I write this as I go through my office files and being reminded.
#arbitration #money #success #mediation #mediator #business #sports #sportsbusiness #sportsmediation #sportsmanagement #businessleaders #businessleadership #entrepreneur
Do You Ever Wonder? The other day I did a family business Mediation out of Texas. I love Texas. This was between a Mom and her daughter. As soon as we began the fight was on. It lasted for two sessions. At the top of their voice the threats were hurled as fast as a Colt 45 bullet blazing back and forth. This is when virtual mediation is good, you don't have to duck down. We worked through the issues, set boundaries and rules, and got it done. At the end I wondered if I had accomplished anything? However, I got a note in the mail saying thank you and that this was the most her mother and her had talked to each other in two years. At the end of the day, you may not feel you did anything and actually you accomplished something good. Amazing! Keep mediating!
#mediation #business #success #coaching #disputeresolution #miami #palmbeach #worthavenue #orlando #sanfrancisco #losangeles #sandiego #newyorkcity #nyc #wallstreet #charleston #savanah #usa #chicago
So remember, mediators that do workplace mediation must know what the new rules are from the EEOC. Do we agree with it? Sorry I have to remain neutral as a mediator.
The current EEO-1 form only provides a male or female option, but there is comment box you can use to report data for non-binary employees by job category and race/ethnicity. The comment box appears on the certification page in the EEO-1 Component 1 Online Filing System. The EEOC asks that you preface this data with the phrase, “Additional Employee Data.” For example, to report a non-binary white administrative assistant, you would type, “Additional Employee Data: 1 non-binary gender employee in Job Category Administrative Support Workers; Race/Ethnicity: White (Not Hispanic or Latino).” In the future, the EEOC may add an option for easily reporting non-binary employees. #mediation #employment #humanresources #business #smallbusiness #miami #palmbeach #orlando #sanfrancisco #losangeles #NYC #Chicago #disputeresolution #savanah #EEOC #workplacemediation #wallstreet #economy #gender #job #hr #jobs
When clients don't listen - I am sure you have had clients that came to you with a conflict they wanted to resolve. After you listened to them you could see what went wrong. A few months ago a young startup owner came to me about working with his partner that just was not working. The partner had brought in his girlfriend to work who was creating friction between the partners. Communication between the two partners was almost nothing. The core issue was a big one, they had not defined their rolls in the business. My suggestion was to sit down with a business Mediator and get to the core problem, define their roles, and create boundaries with the individual creating friction. After my meeting they never took action and are still in the same boat 6 months later. Conflict cost money and stalls growth. Mediate quickly and resolve conflict.
#leadership #business #communication #money #smallbusiness #startup #success #entrepreneurship #entrepreneur #growth #work #mediation #entrepreneurs #businessadvisory |
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AuthorMichael Lodge is a Nationally Certified Professional Mediator specializing in business disputes, as well as family conflicts. He has written three books and hosts an international podcast on IHeartRadio and other podcast media stations. Archives
May 2023
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