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David Werdiger talks succession planning in the modern world

By Interviews8 min read

Carrie Pallardy

Apr 02, 2024

David_Werdiger

Credit: KRISTINA RUOTOLO

David Werdiger is the managing director of the private family office Nathanson Pearson in Melbourne, Australia, and the author of Transition, a book on preparing for wealth transfer. Werdiger spoke with Crain Currency about how he works with high-net-worth families and on planning for succession.

Can you tell us about your background? What led you to work with high-net-worth families?

It really started with having grown up as the youngest child in a HNW business family and one very involved in community. I worked in the family business as a child and as a student and felt quite self-conscious, as the boss’s son, about how others might perceive me. By the time I finished university, I decided not to join the family business. Three other family members all 10-plus years older than me were already working there, and I didn’t see a place for myself. I had a job for a few years but always wanted to be in business because that’s what I saw growing up.

Through 20-plus years of my “second career” as a tech entrepreneur and through several nonprofit directorships, I learned a lot about governance, strategy, intergenerational issues, philanthropy and family offices. I got to know a number of other families and heard their stories. I observed up close what no-profits and families did well and the huge cost to them when things don’t go well. This fed my passion for good governance — what I essentially describe as the responsible use of power.

After completing a master’s of entrepreneurship and innovation, I found myself writing and speaking about family wealth. I was thinking about what I wanted to do with my life — aware that in my own family, there would be an intergenerational wealth transition. I had already learned a lot but needed to continue that and to prepare myself for that future. At that stage, I decided I wanted to help other families on their journey, so I wrote a book and became a family enterprise adviser. That was the beginning of what has become my “third career,” and it has been developing nicely over the past few years.

How would you describe your approach to working with clients?

Holistic. I serve the whole family rather than any one family member. And when working with an individual, I work with their entire self: business, personal and the integration of all parts of themselves. I’m very top-down, pulling back to the big picture and then working down from there. That means there’s initially a focus on values and purpose, and everything either flows from that or has some connection to it.

It’s easier to answer questions like “Why are we doing X?” when we can link them back to the family’s or individual’s values.

Another big area of focus for me is process and decision-making. My goal is to help families make good decisions together. That means families need a good decision-making process — one that raises all voices, considers decisions within the broader family context and therefore generally leads to better-quality decisions. These principles apply equally to my work with family groups and also entrepreneurs and family businesses.

You wrote a book, Transition, about preparing family businesses for wealth transfer. What do you think are some of the most important steps family businesses can take today to prepare for the inevitable changes they will face in the future?

Firstly, be open to change. Not every family business is meant to last forever. The ones that last do regular strategic planning, are prepared to reinvent themselves, make significant changes to the way they do business and avoid holding “sacred cows.”

Secondly, ensure the family members involved are there because they want to be. In families, there can often be an implied or actual obligation to join the family business. When this happens, it can lead to resentment and a sense of being trapped. Being part of the family business isn’t for everyone, and having clear policies on how family members are prepared and qualified to join leads to them being more engaged and aligned.

Finally, provide a pathway for incumbent family members to move to the next stage of their lives. Note: I didn’t use the “r-word” [“retirement”] for a reason. It has connotations of being moved out to pasture and no longer being of value. In a family enterprise, it’s the opposite. More senior family members are a huge source of social capital in the family. So, it’s about helping them transition to the role of “elder,” where they can support/guide/mentor others rather than remain operationally focused until the day they die.

You are writing a second book, focusing on social media. How do you think the constant connection to the digital world has impacted succession planning?

That’s a fascinating question. I actually wrote an earlier version of that book before I wrote Transition, then put that project on hold. I have wondered about the link between the ideas in the book and the work I do with families. The constant connection to digital is, among many other things, another manifestation of the generation gap, which has existed for centuries. Parents and children often live in different worlds and talk different languages. The bigger impact of the digital revolution on succession planning is how it has disrupted so many businesses — that is probably a more significant threat to family business continuity.

What are some of the common succession challenges that you help your clients work through?

Family business succession can be a tricky one. There is the “sticky baton.” The incumbent who says they want to retire but don’t really. So they talk about it and talk about it but never push the button or agree to a formal plan. Or — and this can sometimes be worse — retire but don’t really let go and remain involved.

Then, there is the situation where none of the children want to join the family business. And the reverse, when children are in the business and aspire to move into a leadership role but don’t have the capability.

Another big challenge is when there is an existing conflict situation, sometimes between the incumbent and the rising generation over key business decisions, or within the rising generation over roles within the business or distribution policies or … well, anything.

How can family members develop productive and open ways to discuss and overcome these challenges?

The way to overcome these challenges is largely through discussion. The problem is that just the relevant family members sitting down around a table and trying to work things out often doesn’t work. There are a few reasons for this. One is that there is far more around the table than just the family members. There is the implicit family hierarchy and power dynamic, which means parents will act like parents rather than business owners or partners. Birth order and gender stereotypes can also be an impediment to hearing voices on their merits. I know this from experience — I’m the youngest — and from families I’ve worked with.

Then there are the decades of emotions and family baggage. A conflict that is expressed as who should be CEO might actually be a proxy for a sibling rivalry that started when the siblings were children and remains unresolved. The real issue is often beneath the surface, the things people don’t like talking about.

That is where having a genuinely independent voice around the table can help facilitate open discussion, confront the actual problems and reach consensus. The discussions can be very difficult, but that’s not a reason to push them off. In fact, it’s the reverse. Issues often fester and grow the longer we delay dealing with them. Part of that process is developing a set of guidelines — they might be called a code of conduct or a family charter — which determine the rules by which the family operates. These are all the tools of good governance, and they apply equally to families as they do to organizations.

AUTHOR Carrie Pallardy

Carrie Pallardy is a freelance writer and editor in Chicago.

This was originally posted at [Craincurrency].

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