Business Essentials: Windsor House has water in its blood, but will it cascade through the generations?

Big lessons for growing companies. Kate Hilpern reports on a thriving family firm where the succession issue, unlike the product, isn't crystal clear

When Ian Windsor and his family were running an engineering business in the early 1990s, an employee suggested utilising a well at the back of their factory in Hampshire. "What well?" was the response. Now, Windsor House Natural Water Company is one of the top manufacturers in the British cooler market.

When Ian Windsor and his family were running an engineering business in the early 1990s, an employee suggested utilising a well at the back of their factory in Hampshire. "What well?" was the response. Now, Windsor House Natural Water Company is one of the top manufacturers in the British cooler market.

"Having pumped out some water that was crystal clear, we started working towards gaining natural mineral water status with the help of the Ministry of Agriculture," Mr Windsor recalls. "Many thousands of pounds later and two years on, we became one of the 26 companies in the UK with such a status. Since then, we've worked hard to make the business grow, and there have been some hiccups along the way, but we now have a good position."

Now 50, Mr Windsor is starting to think about the future of the business, and more particularly the problem of keeping it in the family. "It's been uppermost in my mind since my brother, Stuart - who was also a director - died four years ago," he explains.

His oldest child, Richard, who is 24, already works for the company as one of its 20 staff. "There are two distinct sides to our business," says Mr Windsor. "We distribute to many water cooler companies and we are also a distributor in our own right. Richard works for the latter side of the business as a delivery driver. But I always encourage him to do his own thing when he feels ready, in the hope that he will one day return."

Mr Windsor has three other children. Aimee, 22, works as an events organiser; Andrew, 20, is a technician; and William, 18, runs his own garden maintenance business. All of them consider Windsor House a major part of the family. Indeed, their grandfather, now 76, is company chairman and another uncle also works for the business. But the four children don't yet feel able to make a decision about the level of involvement they would like in the future.

"I totally understand that," says Mr Windsor. "I came into the family business at 17 and, although I have thoroughly enjoyed my career and the start I was given, I don't think it's ideal for the current generation. I think it's fantastic that youngsters have such a wide range of opportunities today, and want them to take advantage of these."

Nonetheless, he is left with the possibility that his children may never want to work for the company and, in the meantime, he has some concerns about having no planning in place for future management.

"Even if my children do all decide they want to come into the business, there are potential problems," he says.

"They may not have gained the right skills, for instance, or they may experience the kind of problems that any group of siblings can face when working for a single business."

www.mineralwatercoolers.co.uk

WHAT THE EXPERTS SAY

Stephen Pegge, head of communications, Lloyds TSB Business

"Family firms last longer than others due to a commitment to honour the past and build something for the future, and to the close relationships that help transfer experience smoothly between generations.

"But families sometimes find objective decision-making hard, and this impinges on personal lives. Meanwhile, the informality means that skills and knowledge may need conscious development.

"Temporary opportunities working with companies in related sectors, such as a catering supplier or drinks firm, could help Ian's son Richard to gain new insights and inject fresh ideas into the business.

"There's also a case for recruiting non-family members into the senior management team - on an advisory basis - to plug skills gaps and aid dispassionate decision-making at crucial moments.

"The younger children could be offered holiday work with the company, or invited to lead specific projects, to enable them to make informed decisions. And if nobody ultimately emerges to take control, then a well-planned trade sale could become a realistic option."

Ian Lawson, chief executive, The Campaign for Leadership (consultant)

"This is typical of the problems facing small family businesses at the third-generation stage.

"The first step is to generate a skills matrix identifying what is needed in terms of managing the business and developing future sales.

"This will have business priorities across one axis and skills required across the other. It will form the basis of any development plan for Richard and identify where the other children can contribute now (perhaps informally or via an advisory board) and in the future (either planned or as a contingency).

"The second step is to involve the whole family in a meeting (facilitated by a third party) about:

• The future direction and management of Windsor House Natural Water Company;
• Their own immediate and potential contribution;
• The options for them as stakeholders (employee, director, adviser).

"A written business and succession plan will allow for an external 'interim' manager or a collection of the family to run the business, if something should happen to Ian Windsor."

Nicolas Mabin, director of human resources, Capgemini UK

"Ian should start by trying to develop a five-year business plan - any longer and it becomes too theoretical. With that five-year picture, he can then articulate what roles are required.

"The business plan will call for certain key roles. These can be described in terms of job descriptions and individual profiles. Ian should consider:

• How the existing team meets those requirements.
• What the gaps are.
• What developmental activities are needed.

"Current employees may need to be trained in order to meet those specifications. Ian may need to recruit new people, who could include his four children. But the plan allows members of his family to have a clear idea about what roles are available and how there may be a match.

"Succession planning used to take place in static organisations where it was possible to predict careers over the course of a lifetime. The volatility of today's economic environment means that succession planning is focused on the exercise that Ian needs to do now: short-term thinking; analysis of the skills gap; and matching people's profiles.

"The success of Windsor House Natural Water Company needs to be supported by willing volunteers from his family, who can match their skills to the needs of the firm."