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NEW YORK POST
December 15, 2005
Power Trips When An Outsider Gets The Top Job
When your business’ future plan doesn’t include junior
By: Erika Welz Prafder
For some traditional companies, (like
Bacardi, Anheuser Busch, Levi Strauss) the
key to success has been keeping the business’ secrets ‘all
in the family.’
So what do you do when you have no blood
heir to take over your corporation’s
reigns? Or if you do, he or she isn’t
capable, or interested, in stepping on to
the plate for you? Such was the case for
Herbert Mines.
In the early ‘90s, at age 65, the
executive search firm veteran was geared
up to retire from the company he founded
in 1981 – and which still bears his
name today. The agency specializes in retail,
fashion and consumer product hires.
Hoping to expand and carry on the reputable
brand he’d spent years building up,
Mr. Mines determined he would need to recruit
an ‘outsider’ to succeed him.
But with Mines’ name on the company’s
door, the new CEO would need to be a perfect
fit – both in terms of industry knowledge
and character.
Enters Harold (or Hal as he is known)
Reiter. At the time, the 43-year-old had
been working for a private equity firm and
had used Mines’ firm as a recruiting
partner. “I’d been in executive
search for seven years and before that, a
lawyer like my father. I’d grown up
watching how partnerships operate, in good
and bad,” Reiter says. He added that
the main issue is, “What’s in
the best interest of the company, not for
the individuals involved,” and advised, “if
you put your egos in your hip pocket and
answer that question, then there’s
no problem.”
To determine whether he’d found
the ideal candidate for his job, Mr. Mines
and his wife – who had been the company’s
CFO – met for a series of get-to-know-you
dinners with Reiter and his wife, every two
weeks for half a year. Confident he’d
met his match, Mines set forth an 18-month
transition phase, during which he’d
remain aboard as chairman.
Though he retained the right to let Reiter
go if things were not fruitful, Mines had
agreed to sell Reiter (and partners) the
company after five years, if things did indeed
go well. The only stipulation in the deal
was that, “we wouldn’t compete
with each other,” recalls Reiter. He
added that both he and Mines elected to share
the financial dividends for the assignments
they worked on. “There’s plenty
of dough to go around, and our mission was
to grow the business and do good work,” Reiter
said.
To spread the confidence Mines had in
Reiter, took him out to lunch to meet every
major retail executive client in New York
City. “He shared those relationships
with me immediately,” Reiter recalls.
When his successor came aboard in 1993,
Mines took a two-week vacation, freeing him
to spread his wings. But Reiter admits he
was still received with apprehension by the
14-member staff. “I tried to listen
as much as possible. And I learned that 80
percent of the business was generated by
20 percent of our people,” Reiter said.
He acquiesced to the realization that the
firm needed to recruit more senior-level
recruiters and spread out the work. “This
became our strategic plan,” he said.
While Mrs. Mines remained in her CFO post
for the first four years of Reiter’s
tenure, “She was very supportive. Her
office was next to mine and I trusted her
with everything related to finance,” eiter
said. “She knew the firm more than
I did.”
Under Reiter’s leadership, the company
has since grown four times as large as it
was (from $4 million to $16 million in annual
billings), proving that a family-owned firm
can survive and prosper under new ownership
of someone who doesn’t share the bloodline.
But succession-planning in a family business
doesn’t always go as smoothly as in
this case. Often, family members may believe
they can carry the corporate torch, but because
they have been so insulated, they may not
have the skills or experience that is necessary
to modernize or expand the business.
To avoid problems when transferring such
power, here are some tips from Graham Alexander,
author of Tales from the Top: Involve
family in ‘Big Decision’
Allow people to surface their doubts,
fears and enthusiasMs. If these are buried,
they will come back in a more extreme form.
Host a meet-and-greet
Outsider should meet all family members
in advance of joining the team; listen intently
and ask questions.
What should be done within the first
100 days
The outsider must get to:
Use predecessor as coach/mentor
Newcomer should work in partnership with
the original leader. The transition period
should be long enough to confidently pass
the torch and the outgoing family member
shouldn’t interfere too much with the
new leader’s agenda.
Don’t criticize old policy
Instead, objectively relay why and how
procedures should change. Schedule regular
non-agenda meetings with staff.
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