Guiding Firm After Death of a Leader

Patsy Flanigan remembers the happy times she and her husband had driving to their small farm in northern San Diego County. They used the quiet hours away from their snack business and four teenagers to hold impromptu board meetings. They talked about new products, planting a persimmon orchard, the future.

Death was not on the agenda.

Even when her husband, Owen, fell ill with cancer, the couple skirted the topic.

“The first two years, I think we were in denial,” said Flanigan, who started a Culver City company with her husband in 1970 to sell homemade granola.

When he became too sick to work, in the third year of his illness, Flanigan shouldered Owen’s sales and production duties in addition to her administrative and product development work. Her workdays stretched into nights. It was a difficult time that soon got worse.

A week after Owen’s funeral in the summer of 1992, half of the small production team at Flanigan Farms quit. Sales of the dried fruit and nut mixes began to slip as Flanigan focused on keeping the machines running.

Flanigan found herself working harder and longer to cope with the emotional and business vacuum left by the loss of her husband and partner.

Her response was natural, but it’s not always clear whether taking on a spouse’s role is best for the business and the surviving spouse, family business consultants said.

“It’s kind of like jumping into a swimming pool without looking to see if it’s filled with water or how deep the water might be,” said Paul Karofsky, executive director of the Northeastern University Center for Family Business in Boston.

Too many businesses, family-run or not, are ill-prepared for the loss of a leader. When it happens, clear thinking is often, understandably, in short supply.

“Uncertainty, confusion, anxiety and fear rule the day,” Karofsky said.

He counsels family business members to call a timeout after the death of a leader and suggests a four-step plan to guide them through the transition:

* Appoint an interim management group to run day-to-day operations.

It’s important to ensure sales are made, products are produced and cash gets put in the bank, the consultant said. That helps to reassure employees, customers and bankers that the business will survive. And because it’s clear the management arrangement is temporary, key non-family employees aren’t as likely to view the team as intruders.

* Assess the strengths and weaknesses of the company and decide where it is headed.

If necessary, an outside advisor can help interview key players inside and outside the business to determine their roles and skill levels, where they see the business going and how it should get there.

“If we don’t know where the business is going, how on earth do we know what knowledge, skill and experience is required of the next leader to get us there,” Karofsky said.

* Decide whether the surviving spouse is the best candidate to run the business in the long term.

This requires family members to take a long look in the mirror.

“It’s very unnatural [for a family business] to think of looking outside the business,” Karofsky said. Feedback from key players during the assessment stage can help family members make an informed decision about who should run the company.

* Bring in a board of advisors.

Outside advisors should have experience or expertise in areas important to the company’s growth. A company’s lawyers or accountants shouldn’t be on its board of advisors, but they can often recommend other candidates, the consultant said.

In a perfect world, a family business would have worked through these steps before the death of one of its leaders, Karofsky said.

“If we know ahead of time the consequences of our intended behaviors, what a phenomenal thing: Someone just handed you a crystal ball,” he said.

At Flanigan Farms, Patsy Flanigan relied on several longtime employees to help guide the company during the transition after her husband’s death.

She also joined Toastmasters International to polish the speaking skills she needed for sales. She found support in the Culver City Chamber of Commerce, eventually becoming a delegate to the White House Conference on Small Business. She joined Optimist International. And she joined Joyful Again, a program for people who have lost a spouse.

Still, Flanigan found it difficult to spend time on new-business development. When two of her daughters joined the company a few years ago, her time crunch finally began to ease.

After a long pause, sales have begun to grow again as new products and territories are added.

Flanigan’s skills and confidence have grown, too.

At a recent business conference in Scottsdale, Ariz., she looked in vain for healthful snacks in her hotel room’s mini bar and the hotel gift shop. The result: The resort now stocks Flanigan Farms goodies.

Her husband would have been proud of her, she said.

* If your family business is struggling with a critical issue or has found a creative solution to a common family business problem, we’d like to hear about it. Write to Family Business, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles CA 90012, or send e-mail to cyndia.zwahlen@latimes.com.