Succession planning and insurance decisions were among hot topics during Monday’s educational sessions.
By Erin Rigik Del Conte, Senior Editor
The second day of the National Advisory Group (NAG) Conference began with educational sessions that tackled burning issues that were determined by the NAG Board of Directors.
John Lofstock, executive director of NAG, welcomes attendees to the conference.
John Lofstock, executive director of the NAG, welcomed the more than 100 retailers, representing more than 65 c-store chains, attending this year’s conference.
“NAG has been around for more than 30 years because of the retailers we serve,” he said. He noted that this year’s conference features speakers from 15 leading convenience store chains.
Tony Harris of Thorntons Inc. and NAG Board president, shared how NAG has helped his chain over the years, from a session on ADA (Americans with Disabilities Act) compliance changing Thorntons’ entire store design to a menu labeling session last year that has also spurred action at his company.
Moderator Randy Fulkerson shares his advice.
Burning issue #1 Transitioning Leadership
In a session on grooming next-generation leaders to run your retail business, moderator Randy Fulkerson, president of ABC Consulting Group, said the time for such transitioning is “when you have the force of wind behind the new leader, the company is doing well and all cylinders are firing; that’s the time to give the new leader some momentum.”
He added the next leader should be a person who “is humble, doesn’t know it all and listens. They must excel at servant leadership.”
Sonja Hubbard, CEO E-Z Mart Stores Inc., which operates 285 stores in Arkansas, Louisiana, Oklahoma and Texas, called the transition to next-generation leadership “the evolution of influence” and knows firsthand how necessary it is to plan ahead for eventual succession. She shared her story of taking over E-Z Mart Stores as CEO after her father Jim Yates died suddenly in 1998.
She noted three ways that companies transition leadership:
-strategically
-suddenly/unexpectedly
-Planned transition
The next-generation leader won’t always make the same decisions as the leader before them.
From left, Sonja Hubbard, Bill Weigel and Bill Kent engage in a discussion on transitioning leadership.
“I knew I was CEO when I stopped thinking about what daddy would do. You have to make decisions in your own right,” she said. Leadership styles differ, and that’s OK, she advised. She advised also that new leaders should see adversity is often an opportunity for success, to never quit or get too comfortable, to fail faster to succeed sooner and realize we all need help along the way. Transparency about plans can put employees at ease.
Bill Kent, president and CEO of the Kent Cos., with 42 Kent Kwik c-stores and Kent Travel Stops in Texas, New Mexico and Oklahoma, hadn’t originally planned to be in the c-store business. Kent’s father built the business, but that didn’t make Kent and his brothers a shoe-in for running it. Both of his brothers were fired by their father, who then considered selling the business. Kent proposed buying the company from his father, but his father required an all cash transaction. It took Kent 10 months to be able to buy the business in 1984.
Following the difficult transition he experienced in taking over the company, Kent is looking ahead to make it easier for the next generation. He has developed a two-year management development program where the trainee works all departments and entities. “You’re never promotable until you have identified and trained someone to replace you. This helps indicate confidence and a willingness to help others,” he said.
Kent also spoke on the estate planning and ownership transition. “The goal is zero estate taxes upon mine and (my wife) Julie’s deaths.”
Kent’s plan looks to ensure a transition to the third generation and beyond with possible family management involvement along with professional non-family management.
Bill Weigel, chairman and CEO Weigel Stores Inc. explained that the goal of the Weigel family succession plan is to keep the business in the Weigel family regardless of whether a Weigel family member is CEO/president. The company began estate planning in 1995 and succession planning in 2000.
At this time the Weigel family is committed to having a non-Weigel family member at the helm when Bill Weigel steps down. Ken McMullen, the current president, who has been employed with the company since 1982, will be the CEO of Weigel’s when Weigel steps down. Promoting from within helps continue the culture that has allowed Weigel’s to be successful.
Weigel also mentioned transparency as one of the keys to success of the succession plan. He explained to attendees the policy manuals in place create a smooth transition.
Burning Issue 2: Are you paying too much for insurance?
Joy Gander, principal, Gander Consulting Group, and Vernon Young, president and CEO of Young Oil Inc., speak on insurance planning.
Joy Gander, principal, Gander Consulting Group, and Vernon Young, president and CEO, Young Oil Inc., addressed attendees on how to determine if your firm is carrying the right kind and right amount of insurance.
“When was the last time your firm obtained competitive property and casualty insurance bids or selected your agent/brokers using a Request for Proposal or Request for Qualification process?” Gander asked the crowd. “Why do you work with your current insurance agent/broker? How much are you paying your agent/broker?”
Young explained how using an advocate helps his company.
Gander pointed out that the duty of an insurance agent or broker is to place the insurance you ask for. “Your agent is not required to ask a lot of questions or make sure you have the right type of coverage. You can establish that type of relationship, but it’s a more involved process.”
She advised that every 3-5 years, about six months before the renewal date, businesses should go through a Request for Proposal Process (RFP), where all brokers offer quotes for the same information. “It ensures when you get them you can make sense of them,” she said. She walked attendees through the timeline, how to put together an RFP and what it includes.
“If it has been 5-7 years, go out and test the market. It’s your due diligence.”
To be best equipped to negotiate, retailers should also know their loss ratio for the past five years (losses divided by premium) before speaking with the underwriter. “A good account has a loss ration of 62-75%. Add on 30 points for expenses. You need to know your loss ratio for last five years for each policy you carry. Understand how your operations have changed or not changed. How have you managed those changes in operations? Have those changes hurt your work program? How have you tackled exposure (to risk)?”
Information Exchanges
After the educational sessions, retailers broke into groups of non-competing companies for the renowned information exchanges that are known as the “heart and soul” of NAG. The sessions allow the opportunity for retailers to share ideas and help each other take their businesses to the next level and improve their bottom lines.
