Succession Planning: Making Way
After his company is acquired in a corporate buyout, a seasoned 52-year-old executive is demoted and replaced by a fresh-out-of-college hotshot half his age. To add to his humiliation, the elder exec must now report to his inexperienced junior. While this twisted tale is just the plot of the movie “In Good Company,” released earlier this year, it is also an extreme example of a developing trend across many industries.
According to the Census Bureau, people born roughly between the mid-1960s and mid-1980s make up 50 percent of the workforce, says Carolyn Martin, a principal with Rainmaker Thinking Inc., experts on the evolving workplace.
“[The generations have] tipped and as more people retire, more and more of the workforce will be made up of younger people,” Martin says.
The growing youth movement is beginning to rear its head in the contract cleaning business. And as the new, young leaders are learning, each generation brings with it new problems and new solutions.
By the numbers
The current generational shift is not the result of a booming younger generation, but is the result of mass retirements by the much larger older generations. By 2006, two experienced workers will leave the workforce for every one who enters, according to Rainmaker Thinking.
The Silent Generation (born before 1946) is quickly exiting the workforce and the Baby Boomers (born 1946-1964) are aging. The prime-age workforce will soon be made up of Generations X (born 1965-1977) and Y (born 1978-1986).
Today, about 17.3 million adults between the ages of 55 and 64 are employed, according to the Bureau of Labor Statistics. That is about half the number of employed adults between the ages of 25 and 34.
In 2002, the Census Bureau found that one-third of business owners are under the age of 44. In fact, nearly 8 of 10 American adults trying to start their own businesses are ages 18-34, according to the National Association for the Self Employed.
“I think it’s a trend and I think it is exciting,” says 31-year-old Tiffany Woodley, vice president of finance for her family’s business, Woodley Building Maintenance in Kansas City, Mo. “I’m able to speak with people who are experiencing similar things to what we are experiencing here.”
After several decades in the industry, many building service contractors are retiring and the 60-years-old-plus crowd is giving way to a much younger group of executives and owners.
This industry is filled with family-owned businesses, which have proven to be great breeding grounds for young executives.
“In the last couple of years there’s been a pretty good transition from my father’s generation selling their businesses to larger companies or transitioning to the next generation,” says 40-year-old Paul Greenland, the president of his family business, Aetna Building Maintenance in Columbus, Ohio. “I have seen less and less of my dad’s generation and more and more people my age [who] I don’t know.”
Another driving force behind the youth trend is entrepreneurship. Starting a business in this industry requires a small investment of money and a big investment of time — perfect for young people with small bank accounts and few obligations.
“If I had [then] the obligations that I had [now], I don’t think I’d be able to do it,” says Paul Taylor, 34, founder of Environmental Solutions & Services Inc., in Urbana, Ill. He started his business 10 years ago, before he had a family or a mortgage. “Being young and having no debt and no financial obligations was really a big benefit and a big reason for being able to do it and last through that time period of very low income.”
The handover of the contract cleaning industry from Baby Boomers to Generations X and Y will, of course, be gradual. In time, however, these younger generations will securely be in control. What changes will they bring with them? According to Rainmaker Thinking, they will usher out the last vestiges of the old-fashioned workplace values and norms and finish the workplace revolution.
“Generations X and Y are highly innovative,” Martin says. “The hallmark of successful companies in our country is innovation. Change is a fact of life. If businesses are not willing to constantly innovate about the way they deliver the services, then the competition will eat them up.”
Paul Greenland agrees. Under his leadership, Aetna now over-hires for positions, taking on managers in training for positions that don’t yet exist. He is confident his company will continue to grow and he’s not afraid to hire for the future. That’s a shift from his father’s management style.
“Today we’re much more strategic in our thinking,” Greenland says. “In the old days they were more interested in putting food on the table today than putting food on the table for the next five or 10 years.”
Another important difference between Greenland and his father is a college degree. The younger BSC sees a trend toward professionalism and education in the industry. Greenland’s father started the business with “a mop, bucket, and a lot sweat equity.”
“My generation have college educations and a lot have MBAs,” Greenland says. “From a professional level, we’re going to see more changes, and that’s probably going to start pushing more changes.”
Expect a change in management philosophy, says Rainmaker Thinking’s Martin. While Baby Boomers are often hands-off managers, Generations X and Y tend to be more engaged and hands on. Younger generations are also more interested in recognizing productivity. This pay-for-performance concept is new to older generations accustomed to a hierarchical system of rewards.
Generations X and Y are not completely rebellious. They may institute changes, but they certainly won’t disregard tried-and-true methods. They have paid attention to and learned from the generations before them.
“I think I was very optimistic when I was younger and that I could do things better,” Taylor says. “Ten years later, I find myself doing things in a similar manner to those business owners who are 20 or 30 years older than me. There are a lot of business owners who are older than me who are very successful. I’m trying to follow in their footsteps to some degree.”
New generations, new problems
Young BSCs appreciate their elders’ business acumen; however, they realize they must adjust to stay relevant in today’s evolving business landscape.
“Each generation has their own challenges,” Woodley says. “Each generation has to find their own way to meet those challenges in new and creative ways.”
These are some of the key areas of change that face up-and-coming leaders in the industry:
• Growth: Waves of consolidation have left far fewer BSCs today than there were a decade ago. With fewer players in the business, competition is fierce. The businesses that remain are expanding their reach in an effort to attract new clients. Past generations never considered crossing certain geographic boundaries. Today, territories don’t exist.
“We’re in 10 states now,” says Mitch Murch II, vice president of corporate accounts for Mitch Murch’s Maintenance Management. His father, now retired, is an industry pioneer. “I don’t think my father had a plan to grow too far beyond the St. Louis area. Part of the growth strategy that we had is to create growth opportunities, and that necessitated strategic moves into different markets.”
• Service: The founding fathers were contract cleaners, plain and simple. Today, customers are demanding more from BSCs. They want facility service providers with a knowledge base that goes beyond cleaning buildings.
“Janitorial companies are no longer janitorial companies,” Woodley says. “They are trying to become more of a one-stop provider of all facility services, whether it be the cleaning, the security, the grounds keeping and landscaping, or the HVAC.”
• Technology: Typically, older BSCs readily admit their ignorance of things high-tech. For younger generations raised in the era of Atari and Apple, “technology is like the air they breathe,” Martin says.
Tiffany Woodley’s father has an e-mail address — that his secretary checks for him. Under Tiffany’s and her brother’s direction, Woodley Building Maintenance is computerizing more of its processes.
“A lot of people think of janitorial companies as being mom-and-pop businesses and not on the forefront of technology,” Woodley says. “I think there’s a real change there. We’re constantly trying to implement processes that make us more efficient.”
•Workforce: As the face of the BSC manager changes, so does the face of the frontline worker. Today’s workforce is filled with immigrant workers for whom English is not a first language. Managers must learn to adapt to these shifting demographics.
“It has become a major impact on our industry,” Murch says. “Folks that are coming into the industry now have to think about it; people 10 or 20 years ago didn’t.”
Will the future of business mirror “In Good Company,” with youngsters taking the helm and leading their elders? That has been the case for ESS founder Paul Taylor, who employs many people who are older than him.
After graduating college with an engineering degree in 1994, Taylor worked for a start-up business for one year. That experience, coupled with many jobs during his school years, made him believe he could run a business.
“I was always disappointed with the company or manager I was working for,” Taylor says. “I was always finding things I thought they did wrong and saying to myself I could do it better.”
Has Taylor become the boss of his dreams? He thinks so. As for his peers?
“We’re hoping Generations X and Y will become the managers they always wanted,” says Martin.
Becky Mollenkamp is a business writer in Des Moines, Iowa, and a frequent contributor to Contracting Profits.
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