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Putting Two Leaders in Place

Can a company succeed with two captains? For many family businesses, the answer is yes.

Tne family business; two capable adult children in it. What's a parent to do when the time comes to retire?

That was the problem Marshall Paisner grappled with a few years ago when he thought about succession planning for ScrubaDub, a Boston auto wash chain he started in 1966. "Choosing one child over another is certain to hurt the one who has been passed over," he said to himself and others. "And they're both good at their jobs." Furthermore, he knew his sons, Bob and Dan, would ultimately have to live with the decision.

So he turned the problem over to them. "I told them they had a year to come to a decision they could live with on how to structure the company when I was no longer actively participating," Paisner says. "They had a sum of money to draw on if they needed outside counsel to help them."

"All of us business advisor-types figured Marshall was copping out because he didn't want to get one of his sons angry at him," recalls Paul Karofsky, executive director of Northeastern University's Center for Family Business in Dedham, Massachusetts. "But in the final analysis, his understanding of his children was better than ours. He realized they were going to have to work together, and whatever decision they arrived at they had to `own.' Indeed, if they couldn't make this decision, how could they be in business together?"

Co-leadership, often scorned as sure-fire failure, has developed a new cachet. In fact, a recent survey conducted by accounting and research firm Arthur Andersen shows that 42 percent of American family businesses are considering it (though a far lesser percentage institute it).

Dan Paisner, the younger Paisner brother, admits he pushed the co-leadership idea. "I didn't think the birthright for leadership automatically belonged to the first-born," he says, "especially since Bob and I were both competent and had operated as a team up until this point." He set out to prove his theory by presenting examples of companies successfully using co-leadership.

"We had always planned on working together as partners," says Bob, "but I have strong feelings about titles. Though [they are] not important to me, I think employees and vendors need to know who the anchors are."

The brothers sloshed through succession discussions. Several meetings were spent making certain they agreed on their vision for the future and the corporate culture and philosophy they wanted to perpetuate. Then they thrashed out the details of how co-leadership would work. Eventually, they agreed. They would have the same compensation and percentage of stock ownership, different titles (Bob is CEO; Dan is president) and responsibilities (Bob's are research and development and operations; Dan's are training, sales and marketing), a method of resolving disputes, a stock redemption agreement, and parameters surrounding their own children's entry into the business.

Bob and Dan Paisner were likely candidates for co-leading the company. They had a history of managing by consensus. But with siblings or cousins who lack that history, says Bonnie Brown, president of family business consulting firm Transition Dynamics Inc. in Eugene, Oregon, "it's essential to try some joint projects before deciding upon co-leadership."

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This article was originally published in the May 1997 print edition of Entrepreneur with the headline: Twos Company.

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