Succession planning: Family chemistry

Business succession planning conjures up images of tight methodology, due diligence, ruthless process, and enormous complexity coming together in a carefully defined path. In the case of Jaychem Industries Limited, flexibility, fate and a touch of serendipity also came into the mix.

Business succession planning conjures up images of tight methodology, due diligence, ruthless process, and enormous complexity coming together in a carefully defined path. In the case of Jaychem Industries Limited, flexibility, fate and a touch of serendipity also came into the mix.

Cousins Paul and Richard Jancys and Richard’s sister Katherine Samplonius are an example of a family who work together, and do it well.

They, and Jaychem co- founder Ed Jancys are key players in one of New Zealand’s fastest growing contract manufacturers of health, hygiene, personal care and animal health remedies.

The three say that being brought up involved in the operation (school holidays were spent helping out at the factory)—combined with their different skill sets—means they can move comfortably between being family members and those responsible for managing a complex, demanding and highly technical venture.

Jaychem, like many other New Zealand business stories, grew out of adversity and started out in humble settings. In 1979 Lithuanian-born brothers Ed and Rudy Jancys both faced redundancy. They started mixing potions together in Ed’s garage.

Says Katherine: “I remember watching Uncle Ed and Dad mixing up a potion—such as a shampoo—and then bottling it, throwing it in the back of a car and taking it off to a customer. That’s how the business worked in those days. From there they decided to take on a lease and a premise just down the road and the enterprise continued to evolve until what exists today—a 30,000 sq ft plant, 30 employees and a growing client and product base.”

“Most of all the business gave them freedom to control their destiny and also the time to pursue their own interests. More particularly, being in a partnership and having two people running it took away any worry and strain. There were a couple of them to share the burden.”

Paul reinforces the fact that his father and uncle weren’t necessarily the most methodical of planners but were instead doers.

“For them it was more about doing something for themselves—getting ‘stuck in’ and seeing what they could achieve. They were very much ‘hands on’, we look at employing people with expertise to do certain roles. That leaves us with the ability to look at ways to continue to grow the operation.”

Katherine as Technical Director, was first to join the business over 17 years ago after graduating with a BSc. “It was definitely a family affair that allowed me to work around having a baby. My father also loved having someone to train up. The only talk of succession was comments such as ‘I want you guys to take over the business’ but that was about the extent of it. There wasn’t any sense of a formal succession plan or process being mooted.”

Richard, with expertise in business process design, came on board seven years ago. His entry was more organic than organised.

“I went to university, travelled and then worked in the corporate world in Europe. Eventually returning home I approached my Dad and Ed about entering the business. At first they weren’t too enthused and said the timing wasn’t ideal. Instead of being thwarted I couched my involvement along the lines of ‘let’s see how it works, let’s see what I can contribute’ and it evolved from there.”

Paul, who trained as an accountant with expertise in finance and administration, came into the business just over three and a half years ago. His entree, and the commencement of a more formal approach to succession planning, coincided with the death of Richard and Katherine’s father, Rudy Jancys.

“At the time I was in the United Kingdom and I was working in construction for an engineering firm. My Dad (Ed Jancys) kept ringing asking me to come home and become involved in the business. Eventually I said okay then just showed up one day and started working.”

Succession planning in earnest started with advice from Luke van den Hurk from accountants Hayes Knight and lawyers developing an initial shareholder’s agreement to cater for the two generations working in the business. It needed to take account of, and balance out, any possible competing interests.

Work was done on developing the new company structure that defined roles and responsibilities as well as issues to do with direction.

The four directors all concurred that the document and overall process had to accommodate change, regular review and appropriate modification. Says Richard: “Businesses change; people change so it’s important to have structure but also a degree of fluidity to enable everything, and everyone moves in the same direction.” The paperwork was ready when factors outside anyone’s control came the form of a massive recession.

Katherine says that the timing, and overall effect was remarkably unfortunate but in hindsight was a good thing.

“We had this huge building, we have the lives of close to 30 others to think about, we had our own family issues to contend with, but it very quickly galvanized us all into working together and making decisions together. The aim was to keep the patient breathing.” Paul agrees that adversity was not all bad.

“We identified what was best for the longevity of the business, and worked towards that. We made certain changes, we went out and got new business, and also sacrificed our incomes to put money back into the business.”

Richard says that they all agreed to put the more formal aspects of the succession planning on hold for six months— “either we wouldn’t have a business or it would be different enough that it would warrant some revisiting. We all knew that being a family business means you have to dig deep to protect everyone’s position. It’s not a case of working for somebody else and if that fails you can always go elsewhere. There’s also history behind it as our fathers were the ones who started the venture. We didn’t want to be the generation to see it all come to an end.”

With the recession behind them, and now riding a wave of growth and diversification, Jaychem is on an upward spiral that allows Ed, Katherine, Paul and Richard the opportunity to further cement the succession planning journey. One thing they will consider is engaging an independent director to ensure outside advice remains in their corporate DNA.

“An independent view is often a fresh one,” says Richard. “People in this position can see things that you haven’t necessarily thought of. In the early stages when I came into the business I had lots of ideas because I came from a different world. That different perspective helped Jaychem to diversify and grow.”

Certainly it helped in creating the succession plan and document. “Rather than being full of things that might be out of self interest, or have elements that would benefit one party over another, they worked on behalf of us all. They had no hesitation in telling you that was a stupid idea, or that was a great one. They also provided counsel on how others may have tackled similar challenges and what the four of us in the business needed to think about,” says Paul.

The trio’s advice about succession planning is two-fold: “In hindsight, starting to formalise the planning process sooner rather than later might have been advantageous. Also, if you have any say or control in the matter, do your best NOT to take over the reins in the middle of an economic downturn. It is character- building but also scary.”

Jaychem are contract manufacturers of health, hygiene, personal care (cosmetics and toiletries) and animal health remedies. An extensive range of their own health branded products including topical antiseptics, surgical antiseptics for skin disinfection, skin emollients and protective preparations predominantly marketed to hospitals complete the mix.

Succession strategy: The door has always been open to family members—but the death of one founder, and the desire among three relatives entering the venture for a more structured succession pathway, really got the process humming.

This story originally appeared in Succeed.

Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).