Family Firm Succession – Kogod Now
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Kogod Now / Practitioner Perspective  / Family Firm Succession

Family Firm Succession

My family’s company was founded in Arlington, Virginia, in 1956, as construction of the Capital Beltway began. Alongside the communities that were forming in the expanding metropolitan area, Dewberry built its reputation for civil engineering, architecture, and consulting services.

Article by Barry Dewberry, MS ’82, chairman of the board at Dewberry.

Sid and his four children are whole owners in equal shares of the company. I am Sid’s oldest child, and the only one working in the business. We are focused on the infrastructure for the places where we live and work—most of what you see and everything you don’t. We serve both public- and private-sector clients, the latter being our roots.

Dewberry has grown to 40 offices across the country and 1,800 employees. Our growth is guided with a steady hand: decisions are made conservatively, in the context of how they will impact us decades on. Our company has momentum and clear goals. Words like passion, perseverance, integrity, and intellectual honesty are cornerstones to our employees.

We run lean; in 56 years, we have never lost money. It should come as no surprise that change is accepted only in small doses. That has worked for us; the company is thriving, and we do not have debt. This cautious temperament is why it came as a shock to me when, in 1997, the ground shifted irrevocably—without warning, like an earthquake.

Our Story

In 1997, my father was 70. For him, the notion of retirement was still an abstraction, as it remains even today. I was then CEO, and had served the company for 22 years. At 47, I was focused on my future. Management succession planning in my mind was simple: Sid was the boss until I was the boss.

I was about to get a lesson in just how quickly the world could change. Unbeknownst to me, Sid had been thinking about how to preserve the company as a family business for another century.

That year, I did all I could to dissuade Sid from changing the way we ran the firm and, most importantly, from changing the future I had planned for myself. When that failed, I did all I could to help develop the vision and put it in motion.

Three years later, we had agreed to sweeping changes. Sid kicked himself upstairs to the newly formed board of directors. I resigned as CEO, and we promoted our best man to become the new manager.

If It Ain’t Broke…

It was traumatic for me to rewrite the future without myself as boss. Intellectually, I understood that it made perfect sense to get the succession plan under way, while both Sid and I were still around to guide it. But that did not make it easy.

I still had so many questions: How would a board and nonfamily members as managers work as well as what we had previously had in place? What would happen to our culture and mission now? What made us believe this would promote, or even protect, the family’s interests? There were no reassuring answers…only a plan to move forward.

The plan was detailed and tough-minded. For me, it started with accepting that planning for future Dewberrys—those not even born yet—was becoming my responsibility. We could not predict the family’s future ability to successfully manage, or even oversee, the company for generations to come.

What to do? Our answer was to develop and test a system of management and governance that did not rely on a Dewberry.

First, this meant a board of directors consisting of family owners and independents, with the latter being equal or greater in number. All members had an equal vote, with two exceptions: owners reserved the decisions to sell shares and choose independent board members. The board was charged with ensuring that Dewberry was being managed from a 30,000-feet perspective, in a way that would guarantee its health and longevity as a family-owned business.

For the board, we chose successful practitioners from our world, all of them retired. All previously had run companies like ours, and they came from a similar culture. At Dewberry, our people get warm feelings knowing that they had a hand in building and strategizing for the future of their communities. Clients are neighbors. Our bet was that these members would be sympathetic to our business model and values, and anxious to preserve them. And so, a closed system of values remained closed.

But this was only the first step. The second part of our new strategy was hiring independent managers to run the firm and report to the board. Management’s job is clear: to see that the mission and culture, agreed on by the board, is adhered to. This has to be done on the ground, every day, minding the details.

Next, a comprehensive owner’s agreement spelled out the limits of authority for owners, the board, and management, and thereby the relationship between all three bodies.

Constructive Tension

There have been some bumps along the road. One is that management needs its own space. When tough-minded independent management meets tough-minded owners, who were the hands-on managers just yesterday, there can be friction. As owners, we absolutely need for them to succeed. They have our support, and we do not interfere with their chain of command.

But we also want management to play ball according to the Dewberry playbook, and therein lies the rub.

You hire people who are strong and have vision of their own. Then you ask them to see the world through your glasses. Eighty percent of the time, we think alike or easily smooth over our differences. It’s that other 20 percent that weighs heavily on their minds. I like to call this “constructive tension.”

Adopting a more open and democratic style of management has also brought opinions out of the woodwork. My siblings are now speaking up at board meetings; I don’t always like what they have to say. Independent directors don’t always see eye to eye with each other, the owners, or management. There is more paper flying around. There are more meetings, with more people at them. The pace of making decisions has slowed down to the speed of sound.

I never figured more voices and layers of approval to be inherently better, but I tell myself it’s OK. Maybe our management and decision-making hierarchy was flatter than it should have been.

We’re Not Done Yet

Ten years on, with these three items in place and working, the dust had settled enough for us to see that our work was not done. We were finally getting accustomed to the idea of a future where control could pass out of our hands—but our original questions were not yet completely answered.

How will Dewberry retain its culture and mission if there are not successive family members in the key role of CEO? Through the generations, as board members come and go, how will we keep company oversight consistent?

In 2010 we started a family council, where owners and their children could regularly gather to discuss company business in an open forum. We realize now that in order to keep our business in the family, to remember and respect the original mission, and to ultimately maximize value, we need a strong, united family.

If the family is not close-knit, this can be tricky. But you must have a place to test the interests and mettle of the successors, and to identify which of them will lead and what support they might expect. For the family council we retained a consultant who specializes in organizing and keeping the council on track for the long haul. I believe that one day the family will generate its own momentum…but today, we need somebody to keep us collectively focused on the goal.

We know that the original culture and mission may need to change with time and the interests of future family owners. That will be their decision to make.

In our case, the next generation is still young, and only time will tell of their successes. Our hope is to give them a structure to support them as they work through these complex issues.

I can finally say that I am glad we got started while I was young.

Barry Dewberry, MS ’82, is chairman of the board at Dewberry, where he has served for almost four decades. The family owned firm, which is headquartered in Virginia and has a nationwide presence, provides architectural, engineering, management, and consulting services to public and private clients.

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