The CEO of a family-owned hardware chain in Victoria knows it is time to retire. But how to pass the baton - and to whom?
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Entrepreneur: Bob Harding, CEO and Chairman
Company: Hardings Hardware
Business type: Building supplies
Founded: 1958
Turnover: $50M - $100M
Head office: Reservoir, Cranbourne, Geelong West
Contact details: +61 3 9469 7777
The Hardings Hardware Story
Many people who establish a successful family business hope that their children will succeed them. The problem is how to do it successfully. In Preston, Melbourne, a business started in 1958 - Hardings Hardware - has managed to continue and expand as a second and third generation have entered the company.
Hardings’ chairman and CEO, Bob Harding, began working for his father full-time in the business when he was 16. Now at 55, he has begun to seriously consider the next big transition - easing himself out of the business and planning for someone else to take over.
Harding says: "The epitome of my personal success would be the ability to pass this business on to the next generation, not necessarily all family members, but to the group - the executive team. Once you've been in charge and running the business from the age of 24, letting go is not easy. We are all creatures of habit.
"But I think that if you've got underlying young talent, you've got to be able to recognise it and work with it, set specific dates, and work out what you want to do long-term with your personal life and business involvement. Do you really want to be deprived of the happiness that you've had? Do you want to walk away completely?"
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Key learning points:
- Forward planning - Start succession planning at the right time by pinpointing the talent and expertise in the company and grooming staff for their respective leadership roles.
- Timing - Set specific dates for the stages of your succession planning based on the long-term strategy of the business.
- Inheritance - Decide whether nepotism or talent will be the method for selecting new leaders. If the former, be prepared to lose talented staff to companies at which they can get ahead.
- Transition - Work closely with the new team in a carefully structured transition programme based on phasing out of the existing leadership.
- Letting go - Be prepared for change and willing to accept that the new team may change the way things have been done in the past.
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In 2000, when Harding began to consider his company’s future, the concept of succession planning was new to him. He and his wife, June, have three children; two of them - David and Kellie - work in the business. The problem for Harding was what to do about the members of his executive team who were not members of the family. How would they fit into the succession? And should they be displaced by family members?
Harding says ability is more important than inherited family genes. “For me, it [is the] talent and the desire of relevant people." He says that some people are natural leaders and have a desire to lead by example, which is preferable to others who may make good contributions but who do not have a passion to lead.
Harding says: "There's four people in the company that stand out; they've each got individual talents. One is a family member - our son, [David]. I think they all team very well, [but] there might be a little bit of rivalry."
Harding believes four is better than three, "because you haven't got an odd person out". They should be able to resolve differences without somebody spitting the dummy and this can happen with three. Two of the four concentrate on the sales, marketing area and the other two work on the administration area."
Harding invited all four to dinner and asked them who would like to run the business. Two people put their hands up: the executive group manager, Greg Skene, and Harding’s son, David. Until that evening, he had never asked his son about running the company. "I will now work closer with those people and I will try over a period of time to let go."
Harding says he's not convinced it's in the best interest of the business to get out completely, or if he ever really wants to be completely removed from it.
"My father did, because of circumstances when my mother passed away - part of his life changed. I think that I've got a contribution to make, maybe at the moment it's a little more dominant than it should be - but it can become less. I intend taking a little bit of time off, to see what would happen ... to give the boys a bit of space without me there.
"I'm prepared in essence to share, to give, but I need help to be able to achieve it and they're the ones that have got to give me the help.
"It's accepting that there will be differences and changes and the new team's application might be a bit different to that of your own, you've got to have confidence in the people you work with."
Harding says: the essence of succession is "the recognition and preparedness of where you want to go and when you want to go there".