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20 | HIRE
AND
RENTAL
NEWS
| MAY 2012
INDUSTRY IN FOCUS
Keeping it all in the family
At last year’s HRIA AGM members were treated to a discussion on succession planning and the Kennard’s story by
Kennard’s Hire’s Andy Kennard. Here is a summary of Andy’s presentation in Andy’s words.
Neville on left with brother Andy Kennard. My father had a lot of foresight when he sold the business to
my brother Nev, focusing succession on the management side
“Family businesses represent 60-80% of
all businesses in the world today. Of that
number, over 50% of total employment is
from family businesses.
“From international research, family
businesses on average outperform non
family businesses in many measurements.
They achieve higher return on investment;
have higher profit; have lower debt levels;
management stability is greater and they
remain in business longer than non-family
businesses.
“Family businesses are more respected for
their integrity, morality and service. People
prefer to do business with a family business.
“Family businesses are known as ‘patient
capital’. They’re not in a hurry to grow; not
subject to quarterly reports and are less
stressed about financial return. Employee
loyalty is a big factor and family businesses
tend to have stronger employer loyalty.
“Family businesses are often thought to
be small businesses but often they are not.
Ford, VW, Audi, SC Johnson and Ikea are
all family businesses and the Packers and
Murdochs still control family businesses.”
Andy discovered the Family Business
Association (FBA) by accident about eight
years ago.
“The associations’ prime objective is to
provide assistance to family businesses
and guide them through the minefields
of succession. Management succession
and ownership succession are unique in
family businesses and the situation in every
family business is different. FBA have many
programs and short education courses.
FBA Forums are one key program which
act like a dozen or so mentors in complete
confidentiality. The discussions range from
business to family issues with members
assisting each other to get to the core of
the problem.
“The core aim is to keep the family
together as well as securing the business for
the future.
“The family comes first and the business
comes second. But the aim is to keep the
business for multiple generations.”
Andy acknowledged it has taken his
family five to six years to get where it is
today in terms of its family-in-business
objectives.
“Firstly we discovered our family
values, individually, and then brought our
individual values to the family group. The
amalgamation of those values formed our
family value statement.
“This group (called the Family Forum)
includes our children’s spouses as well
as direct family. We created a Family
Charter – the Kennard’s Family Charter
(or KFC without the fat, as Angus calls
it). This charter is designed to provide
future generations with information on
how earlier family arrived at its current
situation. It gives a history of the business,
outlines the rules of business and guidelines
for family working in the business, our
philosophies, principles and family vision
for the business. This does not necessarily
reflect how big we want to become but
how we want to do business into the
future.
“Our Value Statement includes six things:
1. People at the core of the business
2. Quality and excellence in everything we
do
3. Maximise sustainable growth
4. Strong financial growth
5. Fostering and recognising the bond
between the company and family
6. Caring for the environment
“We also created our Deed of Family
Arrangement (DOFA). It is a legally binding
document on all shareholders that sets out
many rules including how to join and leave
the family business; selling of the company
or shares; in the case of death - what
happens to shares owned by the deceased
family member; and we have rules for the
directors of the businesses so the family
does not lose control of critical areas, such
as debt levels. This document arose from
months of discussion and covers everything
from ownership to succession.
“My father had a lot of foresight when
he sold the business to my brother Nev,
focusing succession on the management
side.
“In 1988 we employed a general manager
who lasted two years and that experiment
was a failure but it was a good learning
situation.
“In the 1990s there was a lot of discussion
when Peter Lancken became CEO.
“In 1989 we employed our first non-
executive directors. They were two friends
I respected in business and initially they
were advisors only. In 1994, Peter Lancken
became the first non-family CEO on our
acquisition of the GKN business.
“I stepped down as Chairman of the
board when I felt we needed more skills
there.
“When I stepped off the board, Angus
took my place as family representative.
This change was not easy for me initially
and the family had some settling-in issues
Continued on p22...