All in the family
A lot of companies fret over succession planning when their top executives are nearing retirement. Others don’t even consider it until faced with the imminent departure of a long-time leader.
For a family business, there’s a perhaps outdated inclination to think someday the kids will just take over. According to the Family Business Institute, “88% of current family business owners believe the same family or families will control their business in five years, but succession statistics undermine this belief. Only about 30% of family and businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond. Research indicates that family business failures can essentially be traced to one factor: an unfortunate lack of family business succession planning.”
In the case of The Alexander Company, the plan wasn’t so much something founder and CEO Randy Alexander and his sons, Joe and Nic, set out intentionally to craft; rather, according to Joe and Nic Alexander, the process of ceding control of the Madison-based family run business from their father to his sons was something that happened organically over 10 years of working together — and close to a lifetime of the company as a backdrop to their lives.
Kitchen table talk
The Alexander Co. has been a near constant in the lives of 37-year-old Joe and 33-year-old Nic.
From the time their father and mother founded the business nearly 30 years ago, Joe, the company’s president, and Nic, a vice president, have played a role.
“I actually have a scar on my forehead from falling off a pile of cement bags when I was 3 years old,” says Joe.
Joe officially started working for The Alexander Co. when he was 14 years old doing grounds and maintenance, and then property leasing and property management throughout his undergraduate years. He went to UW–Madison, and spent some time in the District of Columbia working for the federal government, before returning to Madison and earning his law degree. After law school he decided against becoming a lawyer and joined the company in a vice president/operating officer position, and then in 2008 took over as company president when Randy moved into the CEO role.
“My experience is a little more diverse than a lot of folks in the real estate industry,” Joe says, “but the way our company is structured we have in-house design, construction management, property management, accounting, and, of course, finance and development staff, so you need to know a little bit about a lot of different things. It’s a learn-on-the-job type thing. There’s not any real training you can get for something that diverse.”
Like Joe, Nic says his first job was picking up garbage and cigarette butts around The Alexander Co.’s properties when he was 14.
“I was better at that,” cracks Joe.
“That’s debatable,” retorts Nic. “I’ve heard mixed reviews. But our mother did say that Joe was better at it.”
Nic earned degrees in English and psychology from UW–Milwaukee, but he knew he wanted to join the family company after graduation. Until recently he’s been the head of the marketing and PR division.
“Just having the background of growing up with the company and understanding all these different processes that go on helped significantly in understanding how to market it,” Nic says. “That was really what brought me in — I always believed in The Alexander Co. and had a lot of enthusiasm for what we do along with a conviction that what we do is a good thing versus the way real estate developers can be portrayed at times.
“My parents obviously knew you try to leave work at work but our whole life was The Alexander Company, so we heard about it everyday and every weekend, and just sort of lived and breathed it,” Nic continues. “How many 16-year-olds know how TIF works and things like that. So, you grow up learning all that sort of thing and you grow up seeing, in our case, a really decrepit building being transformed into something really beautiful, and the same with sites where we would have done new construction.”
“It really was kitchen table talk,” notes Joe.
Turning the page
While Joe and Nic are now the ones in charge of The Alexander Co. day-to-day, they’re quick to note things really haven’t changed.
“We’ve got a really great, longstanding team,” says Joe. “There’s a majority of people who work here who have been here a very long time and have developed really excellent expertise. Yes, the technicalities of ownership have shifted but the team is still the same.”
On other thing is still the same, note Nic and Joe: Randy.
“Randy Alexander has not left The Alexander Co.,” says Joe. “He’s still in the office almost every day and is still a real creative force.”
Some children in the same situation might scoff at the notion of a parent still hanging around the office, but Nic and Joe say it’s just part of a remarkably smooth decade-long transition process.
“We’ve had the benefit of the three of us working closely together every day for 10 years,” explains Joe. “It became a question of how heavily and deeply we wanted to get involved and, frankly, when Randy wanted to take a little more time off.
“For years and years the company started out with Randy and my mom buying a house, largely fixing it up themselves and then selling it,” Joe continues. “Certainly, he developed a great business acumen, but really the genesis for his work at the company was always the creative — finding a new project, being involved in design. This is an opportunity for him to go back to doing what he really loves, exercising that creativity and helping to look for the next project.”
“We’re obviously going to take things and look at things a little differently than he always did,” adds Nic, “but he founded this company, worked with it, and put his life into it for 30-some years, so not listening to his advice on things would be short-sighted of us.”
The smooth transition has also enabled The Alexander Co. to avoid some of the growing pains that can come from a change in leadership and continue to move forward.
“I think this evolution has been going on for a long time,” notes Joe. “The Alexander Co. was really Randy Alexander for years and years, but as we’ve grown and added to a really solid team it’s become less personal. But we’re still very entrepreneurial, and we’re going to continue to develop assets and hold them, both in Wisconsin and elsewhere around the country.”
The company has also created a subsidiary that focuses on commercial brokerage, tenant representation, and property management — Alexander Real Estate Services.
“That’s going to be a great opportunity for growth for us,” says Joe. “We have all of the in-house infrastructure we need to do that. In the past we’ve typically done it only for our own book, but there’s no reason we can’t use that expertise and supply a service to others.”
Ultimately, for other family run businesses facing a similar leadership transition between generations, Joe says the biggest challenge is to be both a company and a family. “At the end of the day we’re all still quite close. I think that the best advice I could give anybody during any transition at a family business is to keep that in mind, because you want both your family and your business to be intact.”
“In our case, I’m glad we never had to bring in attorneys and sit on opposite sides of the table,” adds Nic. “The fact that we could sit down and be reasonable and honest with each other about what our goals were and what we needed to do, did assist with creating ongoing harmony from Randy being in the company to what comes after that.”
Click here to sign up for the free IB ezine – your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.