Expectations of Management Choosing the right CEO from the cousin consortium

1. Expectations of Management Choosing the right CEO from the cousin consortium

2. Agenda/Introduction • Background-Tobin Brothers & key Players • Outline a story that’s worked • Management, not equity succession • Detail the distinct phases of our Plan • Reasons for its success • Expectations Analysis

3. Tobin Brothers Funerals • Largest family owned Funeral Co. in Australia • Founded in 1934 by my grandfather and his three brothers; • Currently 13 active family members • Turnover of $22+ million • 130 Staff, across 19 locations • 4500 funerals annually (1 in 5 Melbournians) • FBA’s 3rd Generation Family Business of the Year Award (1999 & 2004)

4. Martin Tobin • 3rd generation MD (since late 1998) • Arts/Law at Monash • Solicitor for four years • MBA at Melbourne Business School • FBA’s Victorian Chapter Committee

5. The Tobin Family

6. Road blocks to Succession Planning • Reluctance of incumbents to let go • Difficulty selecting one family member over another • Incumbent has nothing to do in retirement • Concern that his/her successor will fail • Fear that his/her successor will do better

7. 1st to 2nd Generation (late 1970s) • Kevin Tobin, conservative, prudent founder • Des Tobin, restless, innovative nephew • Second eldest of 4 second generation cousins • Des evolved as natural successor • Broad support of his three cousins • Long wait; Kevin retired in 1981 at age 71

8. 2nd to 3rd Generation (early 1990s) • TB far bigger and more complex • Funeral industry more competitive • Several non-family senior managers had emerged • Eight 2nd and 3rd generation Tobins in the business • No natural family successor within business

9. Phase 1-Recognising the Need1992/93 • Des, at 55, at peak of working life • Conscious of his mortality • Saw company needed new blood • First hand experience as a successor • Had a life outside of work • Importance of enlightened incumbent

10. Phase 2-Building the Framework1993 • Family & Board agreed to role criteria • Agreed to go outside company if necessary • “Cousins” assessed against agreed criteria (plenty of self assessment) • Potential external “cousins” assessed (from which I emerged) • Management team and family consulted • Decision communicated to staff from outset

11. Agreed Role Criteria • Business related tertiary qualifications • Strong communication skills • Time management skills • Natural Leadership qualities • Ability to handle stress • Ideally, some experience outside the business • Preparedness to embrace IT

12. Phase 3-Leadership Development1993-98 • Detailed program written with my input • Escape mechanism created • Exposure to all areas of business; service delivery, administration, sales/marketing, staff training etc • Further training; MBA at Melbourne Business School (1997-98) • Formal management responsibility

13. Phase 4-ChangeoverNov1998 • By late 1998, we were ready • Des had just turned 60; I’d just turned 33 • Decision communicated to staff and externally (advisers, business media etc) • Handover function (not a retirement roast) • Occupied MD’s office and employed new PA • Des relocated to another branch

14. Phase 5-Transition1999-2001 • Des stayed on as Executive Chairman • Clear demarcation of duties established • A real job; specific projects, adviser, consultant, mentor, devil’s advocate • Other involvements; FBA, Golf, writing • Monthly quality time meetings

15. Post Mortem • Far from smooth sailing, but it worked • Des ultimately sold equity too • “Cousins” supportive of my leadership • Company still performing strongly • Model for other internal applications (ACC) • Vehicle to join the Speaker’s circuit

16. Reasons for success • Treated succession as a process, not an event • Enlightened incumbent leader • Started thinking about it well in advance • Established objective criteria • Found someone who met them, rather than the nearest “fit” • Communicated plan to all stakeholders • Treated process as investment not a cost

17. Reasons for success (continued) • Focused on successor’s development needs, and treated them as an investment, not a cost • Built in processes for retiring leader to support, advise and mentor the successor • Provided successor scope to develop own leadership style • Created a meaningful ongoing role for the retiring leader

18. Expectations of PlayersInherent Tensions • Incumbent • Successor • “Cousins” • Staff • Advisers

19. Expectations of the IncumbentI’m out of here (sort of) • Retain a meaningful role (for a while) • Freedom to step back • Maintain a reasonable income • Contribution recognised • Strategy & Legacy respected • Experience utilised

20. Expectations of the SuccessorBe gentle with me • Actual, not notional leadership • Scope to build own management team • Scope to use own advisers • Given a reasonable honeymoon period • Ongoing appraisal/recognition • Return to father/son relationship

21. Expectations of the “Cousins”We’re with you, provided…. • Our role & contribution is recognised • We’re kept informed and have a say • Our investment is well managed • We progress and develop too

22. Expectations of StaffSo what’s Changed? • Cultural lag • Sceptical about prospect of change • Slow to embrace change • Reluctance to acknowledge change • But change happens (whether they admit it or not)

23. Expectations of AdvisersBusiness as Usual • Assumption of continuity • Treat successor as a new client • Re-articulate value proposition • Change of personnel?

24. I’m not afraid of death; I just don’t want to be there when it happensWoody Allen