For Albanese Confectionery, Succession Planning Was a Lifelong Process
- Keywords:
- succession planning
March 07, 2023
|
Business Strategy
Scott Albanese, founder of Albanese Confectionery, taught his daughters about hard work at a young age. As children, Bethany, Tess and Dominique had to sell candy bars door to door or in front of the local Walmart to pay for new bicycles. After selling each bar, they were required to deduct the cost of the materials to pay back the manufacturer. Not only was it a lesson in business and self-reliance, it was—perhaps unwittingly—the early seeds for succession planning.
The Albanese sisters are still in the candy business—now as co-presidents of Albanese Confectionery Group in Merrillville, Indiana, having officially taken over the business from their father Scott in 2018. Since then, they’ve introduced innovative new products and reached new markets. That it's been a remarkably successful transition should be no surprise.
When BMO spoke to Scott Albanese in 2017, he discussed his plans for handing the reins over to his daughters. “I wanted to make sure that I set up the second generation in a very strong position,” he said. “When I was 58 years old, I took my daughters [aside] and I said, something’s going to have to happen. We’re either going to have to position the company to sell, or I’m going to need a strong commitment from you guys to take this over. They thought about it and all three of them came back and said, yes dad, we’ll give you the commitment.”
The Albanese rules
The first thing Scott required was that his daughters had to establish a “rulebook” that would include any situation that could lead to potential disagreements. At the time, none of the daughters was married, but the rulebook even accounted for how spouses and children would fit into the business. “We really wanted to make sure that if there was anything we were going to fight about that we had a rule in place that we could refer back to and reduce those tensions,” Dominique said. “Also, to make sure that this business outlasted not only our generation, but future generations to come.”
According to Tess, the rulebook also required the sisters to gain work experience outside the family business. Part of the reason was to give the sisters something to fall back on in case the business didn’t succeed. But there was another practical reason as well.
"From a succession planning perspective, whenever I'm asked my opinion from other business leaders, one of my big things is that you've got to work outside of your business. Have your kids work outside of the business because it gives them street cred that they've accomplished something somewhere else. Someone else saw value in them. So when they come here, they're not coming with an empty drawer of skills, they're coming here with some kind of tangible skills.”
Dominique notes that spending time outside the family business also helped ensure that taking over the confectionery was what they all wanted to do. “That's just another way of him trying to make sure that there was no entitlement or right to the business,” she said. “It's a gift, it's a blessing. That's how we need to treat it. There was no pressure from him to do this business whatsoever. He was totally OK with us walking away from it.”
Earning their keep
Of course, all three chose to stay. But they weren’t handed leadership positions right away. Each had to work their way up from entry-level positions so that they could learn all aspects of the business.
“I've personally worked in every position from our retail store, through our warehouses, through our manufacturing, marketing,” Bethany said. "Anything that I know about, I know about from the ground up, which is what best prepares you to lead your team because you understand what they're going through when they're going through it. You also have a lot more empathy for the things that they are doing, and then trying to find ways to make their processes better.”
When Dominque was set to take a job in the customer service department, Scott told her that she had to interview with not just the manager, but with all the other department team members. "It was to make sure they felt comfortable with me being on their team, that they had buy-in and that it didn't feel like entitlement,” Dominique said. "I think that really set us up for success. Looking back on it, we didn't have that stigma attached to us, like, you're the owner's daughter; that's the only reason why you're in this position. It gave the employee a little bit of power to say, yeah, I want to pick Dominique on my team.”
For Scott, eliminating any sense of entitlement also meant instilling the belief that the three of them needed to work harder than anyone else. “It's not an inheritance,” Tess said. "I think all too often family businesses treat their business as an inheritance, and that it should be split equally among the next generation. I'm firmly against that.”
The transition took between eight and 10 years. That included their time spent working their way through the company and learning about running the business, with their father’s guidance. This allowed for a direct and gradual handoff from Scott to his daughters. Dominique credits that process with setting them up for success.
"I think that far too many business owners end up doing it in too short of a span,” she said. “Getting that length of time was so crucial to allow us to make mistakes or ask opinions.”
Putting the pieces together
While Albanese Confectionery is known for their innovative products, the sisters employ a unique three-person co-president model. One way they’ve made it work is to take on roles that play to their strengths. For Dominique, who loves cooking and coming up with new recipes, research and development was the natural fit. Tess has a knack for finance and supply chain management, while Bethany thrives on brand creation and operations.
It also helps that Scott now spends much of his time in Florida, creating a physical distance to empower his daughters and give them freedom to run the company as they see fit. “That's something that people who are trying to execute a succession plan—founders especially—don't do,” Tess said. “They don't put themselves physically away from the business. I think when you have your physical presence at the business, it stops your successor from really taking ownership over some of their responsibilities.”
Through it all, the Albanese sisters have maintained the company’s original vision to be the No. 1 candy brand in the U.S., but they’ve evolved in terms of what it will take to get there. "Some of that's morphed over time as we've grown larger and we've hit some of those milestones and then we've pushed the boundary, but our brand was one of our dad’s last big efforts,” Bethany said. “Obviously as the market changes, as trends change, the visions change, and maybe the products that we've needed to put out to continue to work toward hitting that milestone.”
Bethany added that the plan includes expanding their line of gummies beyond the candy aisle and into different export markets.
They’ve already demonstrated their resilience. The COVID-19 pandemic proved that their business model, based on diversity in all aspects of the operation, is working. “The candy industry as a whole is pretty recession-proof,” Tess said. "When there was talk about a government shutdown, I called my father and I said, we're not really sure what to do. What are your thoughts? He said, we know it's recession-proof, I guess we'll find out if the business is pandemic-proof.
“One of the things that he did really well in the past, and what we've continued on, is keeping a diverse business,” she continued. “We have a diverse group of customers and different ways that we can make gummies. We do a lot of dietary supplements as co-manufacturers of quite a few brands, and those took off during the pandemic; everybody was trying to keep themselves healthy. We’re really blessed and happy to say that we didn't have to do any layoffs or slow down the factory because of reduced demand. That was definitely a credit to him. We think the pandemic proved that we had the right mix.”
Key ingredients to success
Dominique, Tess and Bethany’s success comes from a combination of their leadership skills and important lessons passed down from their father. Here are some of the main takeaways they’ve learned.
-
It's about the food. “You can have the best, most beautiful restaurant and the cheapest prices,” Tess said. “If your food sucks, it's going to fail. You can have a dive restaurant that has creaky wood chairs, but if the food you're putting out is top-notch, you know you're destined for success.”
-
Treat people how you’d like to be treated. As Tess put it, “Kindness is a strength.”
-
Maintain the proper question-to-statement ratio. “[Scott] always taught us you should be asking more questions than you should be making statements,” Dominique said. "It really allows you to learn and gather more information, and you're able to attack your problem more efficiently.”
-
Keep it simple. “There’s a lot of noise that could happen, so he always kept it simple and stuck to those guiding philosophies and those were what he made decisions off of,” Dominique said.
-
Know enough to be dangerous. "By being out on the floor, understanding the downtime reports, talking with the maintenance, talking with the operators on the floor, learning the terminology, understanding different issues that can happen and how they can cause a problem allowed me the respect and a seat at the table with our engineering maintenance teams because they knew that I could hold them accountable to these things,” Bethany said.
-
Know and listen to your team. “It’s about asking questions, but also being slow to throw the answers out there,” Bethany said. “Really hearing your team and listening to your team.”
Applying these lessons helped the Albanese sisters establish an early win: building a team and running the company in their own way.
“Being able to build our team, promoting internally, hiring some externally, has been great to see,” Bethany said. “The quality of people that we’ve been able to bring to our team—they challenge us, we challenge them, it’s a very candid environment. That has been a key to the business growing. The relationships have just been great in building this company and seeing our vision of how we want to continue to set this up to last.”
Read more
Scott Albanese, founder of Albanese Confectionery, taught his daughters about hard work at a young age. As children, Bethany, Tess and Dominique had to sell candy bars door to door or in front of the local Walmart to pay for new bicycles. After selling each bar, they were required to deduct the cost of the materials to pay back the manufacturer. Not only was it a lesson in business and self-reliance, it was—perhaps unwittingly—the early seeds for succession planning.
The Albanese sisters are still in the candy business—now as co-presidents of Albanese Confectionery Group in Merrillville, Indiana, having officially taken over the business from their father Scott in 2018. Since then, they’ve introduced innovative new products and reached new markets. That it's been a remarkably successful transition should be no surprise.
When BMO spoke to Scott Albanese in 2017, he discussed his plans for handing the reins over to his daughters. “I wanted to make sure that I set up the second generation in a very strong position,” he said. “When I was 58 years old, I took my daughters [aside] and I said, something’s going to have to happen. We’re either going to have to position the company to sell, or I’m going to need a strong commitment from you guys to take this over. They thought about it and all three of them came back and said, yes dad, we’ll give you the commitment.”
The Albanese rules
The first thing Scott required was that his daughters had to establish a “rulebook” that would include any situation that could lead to potential disagreements. At the time, none of the daughters was married, but the rulebook even accounted for how spouses and children would fit into the business. “We really wanted to make sure that if there was anything we were going to fight about that we had a rule in place that we could refer back to and reduce those tensions,” Dominique said. “Also, to make sure that this business outlasted not only our generation, but future generations to come.”
According to Tess, the rulebook also required the sisters to gain work experience outside the family business. Part of the reason was to give the sisters something to fall back on in case the business didn’t succeed. But there was another practical reason as well.
"From a succession planning perspective, whenever I'm asked my opinion from other business leaders, one of my big things is that you've got to work outside of your business. Have your kids work outside of the business because it gives them street cred that they've accomplished something somewhere else. Someone else saw value in them. So when they come here, they're not coming with an empty drawer of skills, they're coming here with some kind of tangible skills.”
Dominique notes that spending time outside the family business also helped ensure that taking over the confectionery was what they all wanted to do. “That's just another way of him trying to make sure that there was no entitlement or right to the business,” she said. “It's a gift, it's a blessing. That's how we need to treat it. There was no pressure from him to do this business whatsoever. He was totally OK with us walking away from it.”
Earning their keep
Of course, all three chose to stay. But they weren’t handed leadership positions right away. Each had to work their way up from entry-level positions so that they could learn all aspects of the business.
“I've personally worked in every position from our retail store, through our warehouses, through our manufacturing, marketing,” Bethany said. "Anything that I know about, I know about from the ground up, which is what best prepares you to lead your team because you understand what they're going through when they're going through it. You also have a lot more empathy for the things that they are doing, and then trying to find ways to make their processes better.”
When Dominque was set to take a job in the customer service department, Scott told her that she had to interview with not just the manager, but with all the other department team members. "It was to make sure they felt comfortable with me being on their team, that they had buy-in and that it didn't feel like entitlement,” Dominique said. "I think that really set us up for success. Looking back on it, we didn't have that stigma attached to us, like, you're the owner's daughter; that's the only reason why you're in this position. It gave the employee a little bit of power to say, yeah, I want to pick Dominique on my team.”
For Scott, eliminating any sense of entitlement also meant instilling the belief that the three of them needed to work harder than anyone else. “It's not an inheritance,” Tess said. "I think all too often family businesses treat their business as an inheritance, and that it should be split equally among the next generation. I'm firmly against that.”
The transition took between eight and 10 years. That included their time spent working their way through the company and learning about running the business, with their father’s guidance. This allowed for a direct and gradual handoff from Scott to his daughters. Dominique credits that process with setting them up for success.
"I think that far too many business owners end up doing it in too short of a span,” she said. “Getting that length of time was so crucial to allow us to make mistakes or ask opinions.”
Putting the pieces together
While Albanese Confectionery is known for their innovative products, the sisters employ a unique three-person co-president model. One way they’ve made it work is to take on roles that play to their strengths. For Dominique, who loves cooking and coming up with new recipes, research and development was the natural fit. Tess has a knack for finance and supply chain management, while Bethany thrives on brand creation and operations.
It also helps that Scott now spends much of his time in Florida, creating a physical distance to empower his daughters and give them freedom to run the company as they see fit. “That's something that people who are trying to execute a succession plan—founders especially—don't do,” Tess said. “They don't put themselves physically away from the business. I think when you have your physical presence at the business, it stops your successor from really taking ownership over some of their responsibilities.”
Through it all, the Albanese sisters have maintained the company’s original vision to be the No. 1 candy brand in the U.S., but they’ve evolved in terms of what it will take to get there. "Some of that's morphed over time as we've grown larger and we've hit some of those milestones and then we've pushed the boundary, but our brand was one of our dad’s last big efforts,” Bethany said. “Obviously as the market changes, as trends change, the visions change, and maybe the products that we've needed to put out to continue to work toward hitting that milestone.”
Bethany added that the plan includes expanding their line of gummies beyond the candy aisle and into different export markets.
They’ve already demonstrated their resilience. The COVID-19 pandemic proved that their business model, based on diversity in all aspects of the operation, is working. “The candy industry as a whole is pretty recession-proof,” Tess said. "When there was talk about a government shutdown, I called my father and I said, we're not really sure what to do. What are your thoughts? He said, we know it's recession-proof, I guess we'll find out if the business is pandemic-proof.
“One of the things that he did really well in the past, and what we've continued on, is keeping a diverse business,” she continued. “We have a diverse group of customers and different ways that we can make gummies. We do a lot of dietary supplements as co-manufacturers of quite a few brands, and those took off during the pandemic; everybody was trying to keep themselves healthy. We’re really blessed and happy to say that we didn't have to do any layoffs or slow down the factory because of reduced demand. That was definitely a credit to him. We think the pandemic proved that we had the right mix.”
Key ingredients to success
Dominique, Tess and Bethany’s success comes from a combination of their leadership skills and important lessons passed down from their father. Here are some of the main takeaways they’ve learned.
-
It's about the food. “You can have the best, most beautiful restaurant and the cheapest prices,” Tess said. “If your food sucks, it's going to fail. You can have a dive restaurant that has creaky wood chairs, but if the food you're putting out is top-notch, you know you're destined for success.”
-
Treat people how you’d like to be treated. As Tess put it, “Kindness is a strength.”
-
Maintain the proper question-to-statement ratio. “[Scott] always taught us you should be asking more questions than you should be making statements,” Dominique said. "It really allows you to learn and gather more information, and you're able to attack your problem more efficiently.”
-
Keep it simple. “There’s a lot of noise that could happen, so he always kept it simple and stuck to those guiding philosophies and those were what he made decisions off of,” Dominique said.
-
Know enough to be dangerous. "By being out on the floor, understanding the downtime reports, talking with the maintenance, talking with the operators on the floor, learning the terminology, understanding different issues that can happen and how they can cause a problem allowed me the respect and a seat at the table with our engineering maintenance teams because they knew that I could hold them accountable to these things,” Bethany said.
-
Know and listen to your team. “It’s about asking questions, but also being slow to throw the answers out there,” Bethany said. “Really hearing your team and listening to your team.”
Applying these lessons helped the Albanese sisters establish an early win: building a team and running the company in their own way.
“Being able to build our team, promoting internally, hiring some externally, has been great to see,” Bethany said. “The quality of people that we’ve been able to bring to our team—they challenge us, we challenge them, it’s a very candid environment. That has been a key to the business growing. The relationships have just been great in building this company and seeing our vision of how we want to continue to set this up to last.”
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