The biggest threat to incapacitated business
owners is that so much of their business is based on their
personal relationships with bankers, customers and suppliers,
says Andrew Keyt, executive director of the Family Business
Center at Loyola University in Chicago. If the owner is taken
out of the loop, what does that mean for those outside people?
"In the best case, they know other members
of the management team and things will go smoothly,"
Keyt says. "In the worst case, a line of credit isn't
extended, or maybe suppliers don't have as generous credit
terms to offer. If suppliers are concerned about getting their
money, they won't wait 90 days."
Any company where the leader contains all
the knowledge is threatened by the possible illness of that
leader, Keyt says, adding: "The more the leader can delegate
and share with people working for him, the lower the threat."
Having access to people from outside the
company who can step in is another way of addressing the problem.
* * *
As Myrna Pedersen planned time away for surgery
in January 1995, she figured Joan McGrath, her partner in
Pedersen/McGrath Associates, a Chicago media and presentation
training firm, would be in command.
But two unexpected events left both women
scrambling. First a post-surgical complication sent Pedersen
back to the operating room for a second procedure. Second,
while Pedersen was recovering at home, McGrath's mother died
McGrath and Pedersen called all their clients
personally to explain the situation and reassure them that
their needs, especially those that were urgent, would be met.
"Initiating the calls ourselves was crucial in maintaining
the rapport we had worked so hard to build," Pedersen
Depending on a "professional resource
file" they had built when they had started their business,
the two women found people to fill in for them as necessary.
Business owners, without resources files
of their own, may find help at temporary employment services
specializing in professionals. "Bringing in a temporary
CEO who has financial skills and a general familiarity with
the industry can keep things running on a temporary Band-aid
basis," says , a Chicago attorney and
expert in business succession strategies.
To take the first step toward creating policies
that go into effect when the CEO becomes incapacitated, business
owners must face the fact that they are mortal and subject
to the whims of fate. Older business owners are especially
concerned that having a plan - even one meant only for temporary
absences - sets the stage for a more permanent or general
relinquishing of control.
Regaining control need not be a problem,
says . The key is to choose a second-in-command,
then assign that person specific responsibilities that would
be taken on as needed. sees this arrangement - which must
be in writing - as comparable to an employment agreement.
"It gives the employee the flexibility to discharge
his or her responsibilities, but it does not preclude the
owner removing the contingency and restoring the status quo,"
says. "If the business is
operated as a sole proprietorship, you might want a power
of attorney granting this person the authority to make decisions
and implement them. If it's a corporation, the bylaws should
handle governance issues identifying the vice president and
saying under what circumstances he or she succeeds to the
authority of the president."