Balancing successful succession

Western Earthmoving was founded in 1958 by Arthur Baxter. In 1964 Wal Ragg joined and together they forged what is now one of New South Wales’ largest family-owned civil contracting companies – now known as WEM Civil.

In 1986 Wal and his son Graham purchased the business and they worked closely together till Wal’s retirement in 2000. Graham then led the business for over 20 years with his sons Michael and Matthew. Michael was recently appointed as Chief Executive Officer and Graham is Executive Chairman. 

{CF_VIDEO}

Combining family and business can be fraught. So what does it take to develop the type of business your family wants to stay involved in?

There are four key values the team at WEM Civil live by – team, customer first, trust and legacy.

Legacy is an important part of the Ragg family’s story. Graham said the keys to their success as a family business is “always remember the company is the mothership that must be protected at all costs”.

A shared vision

Graham gathered experience over the years and said he learnt valuable lessons about succession planning when he took over from his father – some good and some bad.

Only one in five family businesses have policies on engaging and educating younger family members, according to ANZ Private Bank. Its analysis shows effective methods include having a mentor, observing what their families do and on-the-job learning with board roles.

Graham can’t pinpoint the moment he knew his son Michael was ready to take the reins – it was a journey of learning all aspects of the business.

“There was a moment four years ago in a meeting when it was put to Michael – ‘you are doing a good job as General Manager but you haven’t faced any real pressure yet. You need a challenge’,” Graham said.

Then along came COVID and other challenges.

“I had been a leader during a sustained growth phase of a decade plus, with no real market pressure or challenges. But then in the construction industry we had three one in a hundred-year events occur one after the other.”

After the pandemic came record Sydney rainfalls which shut down the sector. Then followed hyperinflation as costs jumped and made life difficult for businesses trading on fixed prices.

“That has tempered me it is fair to say – I have learned true resilience,” Michael said.

Staff loyalty

Michael also learned to put the team first and built trust with staff during the COVID and rain-related shutdowns, Graham said.

Staff loyalty is crucial to family businesses and needs to be maintained across generations.

“A lot of our team needed some TLC (tender loving care) and phone calls as times were tough,” Graham said.

Staff loyalty is something WEM Civil prides itself on. Some employees are in their third and fourth decade with the company.

“I think the backbone of the business is looking after people. If you look after your people, they will look after your customers and therefore your business,” Michael said.

“Facing challenges meant we had to make some hard decisions from the business perspective to look after people to ensure they could put food on the table and pay their bills.”

This included sending employees care packs and meat parcels to boost morale.

“Sometimes you must tighten your own belt to ensure people are well looked after,” Michael said.

This has helped the business develop a strong culture.

From the company’s offices at Bella Vista in Western Sydney, Graham can still drive past suburbs such as West Pennant Hills, Cherrybrook and Castle Hill that he was involved in building almost half a century ago.

And Michael can recall being at his Dad’s feet as these houses were constructed.

“The big benefit of construction is the legacy. You are building a community,” Michael said. “Communities flourish. Homes are filled. Families live there and the playgrounds are busy.”

Real leadership

Maintaining a sense of inclusiveness is crucial as staff numbers have jumped to 280 from 150 over the last five years.

“We don’t want to lose that great culture. Construction demands real leadership. Everyone has our mobiles, we are always contactable.”

Honesty, transparency and communication within the family is also critical for succession to be effective, Michael said. Just as important is having good external advice.

WEM Civil and the Ragg family have worked with HLB Mann Judd as their business advisors since foundation and their input is essential. And ANZ has just celebrated the 60^th year of its banking relationship with WEM Civil.

Michael has three brothers – Tom who runs a media company, Cameron a psychologist and Matthew also works at WEM Civil managing its plant, skills and operator training.

The family’s vision extends through every aspect of the business, including its philanthropic work. It’s one thing to pass on material wealth, but it is more important to pass on a lasting legacy, Graham said.

“Our family is fortunate to be in this position and we want to safeguard it for future generations.”

David Lipari, is Director of Financial Advice with ANZ Private Bank