How we went from family-run to external leadership: We had to decentralize decision making

Michael Waters is the chief executive officer of the Minto Group.

Longevity is a rare achievement in the collective history of family-owned businesses. Among such enterprises, only three out of 10 successfully transfer the business and family wealth between generations, according to a recent report by management consulting firm PwC. A mere 5 per cent make it to the fourth generation.

Yet, a desire for long-term survival seems to be programmed into the DNA of family-owned companies. For founders, the business represents a hard-won legacy – a lifetime of work they hope will live on through many generations. For the inheriting generations, the family business is often part of their identity and personal history, not to mention a source of income and, in some cases, prestige.

Outside the family circle, there are also plenty of reasons to keep family enterprises going. A 2019 Conference Board of Canada report attributes close to half of all private-sector jobs in Canada to family-owned businesses. These companies also make up almost 65 per cent of all private-sectors in the country’s economy and account for almost half the total GDP generated by the private sector.

I knew when I became chief executive officer of the Minto Group in 2013 that I was being entrusted not only with the future of a well-respected business, but also with the legacy of a company that had a rich history and deep family roots. The Greenberg family founded Minto in the 1950s and grew the business – over 75 years and two generations – from a small home-building business in Ottawa to a major real estate developer and property manager, with operations across Canada and in parts of the United States.

By 2007 – around the time I joined Minto as chief financial officer – the company was on the brink of a major change. The Greenberg family was intent on maintaining ownership and growing the business, but there were no third-generation members interested in stepping up to lead the company.

My appointment as CEO marked the first time in Minto’s history that top leadership would be occupied by someone other than a Greenberg. It was a key starting point in a strategic transition that would see Minto transform from a family-owned and family-run business to one that would still be under Greenberg ownership but managed by external leadership.

The main objective of this transition: to build an enduring company on the solid, decades-old foundation laid down by the Greenberg family.

One of the first things we addressed was governance. As with many family businesses, key decisions at Minto were made by a small group of family members and long-tenured executives. This approach had served the company well, but as we expanded into new markets and took on more complex projects, Minto needed a more scalable governance structure.

We decided to move to a governance model that looked more like that of a public company. Today we have a 10-member board and only three of those members are from the Greenberg family. The other seats are occupied by independent directors who chair Minto’s audit, compensation and governance committees. This governance model has been key to ensuring that the company continues to grow responsibly, with rigorous oversight, while still aligning with the family’s long-term vision.

While governance was a critical piece of the puzzle, culture was equally important. As we moved away from a centralized decision-making structure, we recognized it wasn’t enough to simply delegate authority to employees. We also needed to build a culture where people felt empowered to make decisions and be accountable for those decisions.

It took time to achieve this, particularly given Minto’s long history of family-centred decision making. We started by empowering employees at all levels to make decisions, and then backed this up with an environment where mistakes were seen as learning opportunities.

Knowing that the best decisions are always evidence-based, we also set out to create a workforce with a deeper understanding of the business. Family-owned companies tend to share their business and financial information only within a small circle of people at the top of the hierarchy. As part of our transition strategy, we determined it was critical to give our teams line-of-sight into our business plan so we could all be on the same page.

These are just some of the key stages in Minto’s journey from family to external leadership. More than a decade after we began this transition, the work continues and there have been many lessons along the way. I learned among other things that independent governance doesn’t dilute the family’s influence but rather strengthens it with diverse ideas from outside perspectives.

I also learned how the true strength of a leader can be measured as much by their willingness to share control as it is by their take-charge abilities. I saw this in our board of directors’ executive chair, Roger Greenberg, son of one of the four founders of the Minto Group and CEO of the company from 1991 to 2013. His willingness to cede a great deal of authority to a board made up mostly of non-family members signals his deep commitment to leading the business into a strong and enduring future.

Maybe that’s just part of the Greenberg family DNA. When you’re in the business of building homes, you don’t think in terms of quarterly or annual results. Instead you look at every project as a long-term investment, with every house or condominium designed to last through generations.

You also view the business through the lens of family values and legacy. From where I sit today, I can say with confidence that the company founded in 1955 by Gilbert, Irving, Lawrence and Louis Greenberg remains at its core very much a family business, one that has opened its chambers of leadership to outsiders like me.

While this isn’t the only path to longevity – many successful and longstanding family businesses today are still run by family leadership – it is so far proving to be the right way for Minto.

This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about the world of work. Find all Leadership Lab stories at tgam.ca/leadershiplab and guidelines for how to contribute to the column here.