Summer break is a little different for the third generation of Sioux Falls-based Lloyd Cos.
The six kids, who range in age from 6 to 12, have been known to spend part of their time away from school learning in a real-world way within their family business.
There have been mock interviews with the Lloyd human resources department, meetings with the marketing department and education in accounting to begin to understand financial basics.
There’s exposure to the day-to-day reality of running a major regional development, construction and property management company too.
“The kids have gone out and picked up garbage on the properties,” said Christie Ernst, a second-generation member of the family business who serves as senior vice president of property management.
“They usually do that one day every summer, and Grandpa and Grandma will take them on a property tour and show them what we’re working on around the community.”
“Grandpa and Grandma” are Craig and Pat Lloyd, who founded the business in 1972 and have taken an intentional approach to transitioning the company into its next generation.
Craig stepped away as CEO almost five years ago, passing on leadership to his nephew, Chris Thorkelson. His three daughters also are involved in the business.
Ernst, who has served as board chair for the Prairie Family Business Association, recalls helping start the succession planning process a decade ago.
“We transitioned five years ago, but the work is never over,” she said. “You have to keep the conversation going.”
That commitment to family business best practices recently helped land Lloyd Cos. on a prestigious list.
Philadelphia-based Family Business Magazine marked its 30th anniversary by honoring 30 exceptional families it identified nationwide.
The family businesses were chosen for their significant progress in the following areas:
- Creating family governance structures.
- Developing sound policies to ensure the family continues as good stewards of the business.
- Promoting harmony among the extended family.
- Building connections among family members and encouraging their engagement with the business.
“These families understand that governance work is never ‘done.’ Stewardship of a family enterprise requires a continuing commitment to work together toward the common goal of staying in business as a family,” the magazine wrote.
It’s a philosophy shared by Lloyd Cos., where Craig and Pat remain part of the board of directors and where working on the family business is as top of mind as working in the family business.
Last week brought a perfect example, as the family held its annual meeting with a facilitator it found through being a member of the Prairie Family Business Association.
“Every year, we have to produce an owners’ plan, and that tells the board what we want out of the business: for information, financially, the values we want to see, all those things,” Ernst said.
“It’s pretty easy for Craig and Chris and I who are really involved to say we’re getting everything we need. But my sisters, Mary and Liz, and my mom aren’t in the grind every day. So this is their chance to say what they need to feel comfortable staying invested in the business.”
The family transition conversation started with a question from the facilitator: “Who wants Craig’s job?”
While none of his daughters did, his nephew Chris showed interest. From there, “we outlined what it would look like, and the different things Chris would have to do to become CEO someday,” Ernst said.
“We set a timeline for different events. He would become VP of construction and then VP of development and then chief operating officer, so he’d know all the parts of the business.”
Craig set a date too.
“I think Craig originally said he was going to retire in 2018,” Ernst said. “But his date kept getting shorter because we were hitting our milestones. Chris started hiring his own team, and Craig’s team became smaller. Everyone who was newly hired reported up through Chris.”
Craig now regularly spends part of the year out of state but receives regular project updates and has the ultimate decision on investments.
“And when he’s in town, he loves to go through the sites, and he’ll point things out,” Ernst said. “And when project managers send pictures with their updates, he gets those, and it gives him a pulse and confidence for what’s going on. If he sees something that concerns him, he’ll speak up.”
Looking back, Ernst credits strong communication – both among family members, the board of directors and to the company’s employees – as key to the plan’s success.
“I would say it went better than envisioned,” she said. “I don’t know that my dad would have ever retired. I think we would have just kept working alongside him. With so many businesses, families don’t talk about it. And either the founder dies or they do decide to retire but haven’t groomed anyone. And the next generation feels like they’ve worked there long enough and give up because they don’t know what the future is.”
The next generation of Lloyd Cos. will have a clear path into the business thanks to a foundation being created now.
Twelve-year-old Ellie, who is Ernst’s niece, has started attending some family meetings and came along this summer on site selection for a new apartment community.
“We talked about what we liked about the various potential locations and why,” Ernst said. “And we have her responsible for naming the apartment community and helping work through the floor plans.”
Third-generation family members will have to work elsewhere before being considered for jobs at Lloyd, she added.
“We want to at least have them understand and appreciate the business with no expectation they will work here,” Ernst said.
“Through Prairie Family Business, we’ve come to understand that if they’re not happy and successful in another company, they’re not going to be at your company either. We want them to be able to have that sense of accomplishment rather than a sense of entitlement.”
The Lloyd family’s approach serves as a strong model for others, said Stephanie Larscheid, executive director of the Prairie Family Business Association.
“The best practices this family demonstrates and the relationships they have helped foster within the association truly show the best of what membership has to offer,” she said.
“We’re so happy for their well-deserved recognition and continue to appreciate the leadership they bring to our organization.”
Ernst’s two children both say they want to work in the business, she said.
“And I say, ‘Well, you’re going to have to work really hard to make that happen because you don’t just get a job here,’ ” she said.
The conversations and early involvement are making an impact, though. They recently talked about employees, and “that as owners we have a responsibility to them and their families,” Ernst said.
On the way to a company picnic, her 11-year-old daughter, Libby, asked if her parents would let the kids know if there ever were financial problems.
“She said it’s because they would want to help, that they would give up anything because they know how important the company is to us,” she said. “That was pretty powerful coming from kids.”