Five Questions with Family Business Fellow Derek Vanderlinde

Derek Vanderlinde spent more than 20 years leading Vanderlinde Electric Corp., a third-generation family-owned business. In 2001, he helped broker the sale of the family business to pursue new passions. That path has led to St. John Fisher College, where he has taught in both the undergraduate and graduate programs in the School of Business since 2011.

Today, he also serves as family business fellow at Fisher, sharing his knowledge and expertise with owners and future leaders of family businesses. Here he shares lessons learned from transitioning his family business and the unique challenges family-owned firms face today.

Q. In 2001, you transitioned the sale of your family business, Vanderlinde Electric Corp. What lessons from that experience do you bring to the Family Business Initiative?

A. I learned that it is never too early to ask the question “What’s next?” And, it’s never too early to have an orderly plan to get there. For personal reasons, there came a time when I needed to exit the business. The earlier than expected timing and lack of an orderly transition plan meant that our family did not realize the true value of the third generation business.

Q. In your experience, why is it important for family businesses to have a transition plan in place?

A. There are two basic ways family businesses transition. Ownership transitions to the next generation or it transitions to non-family owners. In either case, there are many options for an orderly transfer if there is a plan. Tax and estate planning counsel are critical. In addition, there will be family issues that need to be resolved. Paramount among those issues: if ownership is to remain in the family, is the plan for leadership succession developed? And, if there are multiple next-gens coming along, what are their roles?

It is also important to have a plan to provide for potential unforeseen transition. Ken Glazer spoke eloquently on this topic when he shared the story of the challenges faced by his family and their family enterprise after the tragic loss of his parents in a plane crash.

Q. Before transitioning the company, you served as its CEO for more than 20 years, a third-generation leader of the company. During that time, what did you learn is unique about leading a family business? What challenges do family businesses face that others might not? What benefits come with working in a family business?

A. You have posed several very large questions!

Here are some “unique challenges.”

1. The family “stockholders” are not the only family “stakeholders.” Quite often, the spouse of a stockholder has influence. “Ex-spouses” may own stock and can present a unique set of issues. In my case, I had three siblings who had no interest in the business but had ownership in the operating company and the real estate partnership that owned the office building.

2. Transition planning can be a challenge when trying to satisfy the estate planning issues that can vary widely among family members.

3. The question for “governance policies” must be carefully addressed. One particular issue that can become tricky is formation of a clear policy around the issue of “personal” versus “family business” resources—most particularly money.

4. If your name, as owner, is on the business, there is an almost constant subconscious concern about protecting the legacy.

Q. In your experiences as a facilitator and coach for CEOs and executives, what is the one thing executives should keep in mind in their day-to-day leadership of their organizations?

A. There is no “one thing” that does this question justice. I teach a whole course that is merely an introduction to what CEOs need to keep in mind!

That being said, here are two thoughts. First, as a CEO, remember that your followers will determine your success and your legacy. Second, CEOs are often tempted to become the “go-to answer resource” in their organizations. I would suggest that rather than searching for and delivering the “right” answer, CEOs spend far more time looking for the better question. The only way to better answers is to ask better questions.

Q. What do you feel are the biggest benefits of peer mentorship programs like those that Fisher is launching? What types of activities do you see the peer groups engaging in?

A. Membership in a peer-to-peer program gives members a learning experience and a support group. Learning takes place as the members share common problems and explore various alternatives. Further learning comes because of the speakers and educational material the facilitator brings to the group. Support in a peer group is best evidenced by the comment of one member who said, “This group has shown me that I am not alone.”

Monthly, the peer groups will do two things. First, they will participate in a facilitated, confidential, discussion of issues that participants need to discuss. Participants will receive training on how to process issues and ask good questions of each other and share experiences, vs. giving advice. Second, they will have a learning forum taught by experts that cover relevant topics related to leading oneself and others, and learning strategies to become more effective in their business and ownership responsibilities. Throughout the program, participants will discuss and plan for the transitions they are facing.