When it’s time for transition, put plan in writing

MAKING THE TRANSITION: The DiLeonardo International leadership team, from left: Lia DiLeonardo, Robert DiLeonardo, Giana DiLeonardo and James Lehouiller. Robert DiLeonardo founded the company 40 years ago, but has since retired. / PBN PHOTO/BRIAN MCDONALD
MAKING THE TRANSITION: The DiLeonardo International leadership team, from left: Lia DiLeonardo, Robert DiLeonardo, Giana DiLeonardo and James Lehouiller. Robert DiLeonardo founded the company 40 years ago, but has since retired. / PBN PHOTO/BRIAN MCDONALD

Tucked in the back of a sprawling office park along Post Road in Warwick is an architectural-design firm with a worldwide footprint. Founded 40 years ago by Robert DiLeonardo, the company today designs some of the most beautiful interior spaces in the world, under the leadership of a trio of second-generation owners.
Daughters Lia and Giana DiLeonardo and son-in-law James Lehouiller (he’s married to Lia) today own equal shares of DiLeonardo International, while the founder holds a 10 percent share. The owners and the 40-plus people working in Warwick collaborate with DiLeonardo teams in Shanghai, Hong Kong, the Philippines and Dubai to design the interior spaces for some of the world’s finest five-star hotels.
Robert DiLeonardo did not set out to build an international design firm, but a New York City hotel project with an overseas developer led to an international contract, which led to another, and the rest is history. Likewise, his children did not set out to own dad’s company, but one thing led to another, and today they own it.
The transition from founding father to a new generation happened fairly close to textbook – if the textbook were written by William T. O’Hara, executive director of the Institute for Family Enterprise at Bryant University. O’Hara, who has studied and advised family businesses for decades, has several suggestions for any business approaching a transitional stage.
“Commandment No. 1, for every family business, like any business, is to have a constitution that guides the business,” O’Hara said. “That document should include the basic philosophy of the family business, how they want to grow, what their philosophy is, how they want to change, if they want to change.”
Though they don’t call it a “constitution,” DiLeonardo has a guiding document. It was created at the beginning of a five-year process of changing ownership, from 2001 to 2006. The DiLeonardo document outlines the roles each owner will play, how decisions will be made and more. “Without having the guidelines in place, it would have been very difficult,” Lia DiLeonardo said.
“It helped set the parameters, and it’s helpful to go back to it when we need to,” Giana DiLeonardo said.
Of course, a document can’t guide all decisions or conflicts, and the owners can’t turn to the file cabinet every time they have a problem. They often have to work things out as co-owners, spouses, sisters, in-laws, co-workers – all of the above.
“We know each other so well, it’s crystal clear when someone has a problem,” Lehouiller said. “So you have to communicate all the time. You can’t throw in the towel, you have to fight your way through it.”
O’Hara suggests that owners educate themselves about family businesses, as Robert DiLeonardo did. Before starting the transfer in ownership, he read a couple of books on the subject.
O’Hara recommends all family businesses have outside advisers. DiLeonardo once again followed that advice when it was time to change ownership. For many years, DiLeonardo never worried about the future of the firm; he was too busy building it. And in the beginning, his children were not part of it. Lia DiLeonardo got her master’s in architecture from the Rhode Island School of Design but had plans to be a teacher. Giana DiLeonardo earned a degree in social work. Lehouiller went to work on Wall Street.
One by one, however, they found themselves joining the firm, and they fell in love with the work. “It’s very romantic, very alluring,” Lia DiLeonardo said.
After all three had been with the firm for years, the founder began thinking about a transition in ownership. He contacted one of the world’s leading business schools, the University of Pennsylvania’s Wharton School, and hired advisers to lead the firm through the transition. Under Wharton’s guidance, Robert DiLeonardo outlined a five-year plan. The plan included the roles and responsibilities for each person (including the founder), the timeline for shifting responsibilities and the process for making decisions. Three and a half years into the five-year plan, DiLeonardo decided he had seen enough. The kids were ready.
“I learned very early in my career that once you start to grow people, once they get going, get out of their way,” DiLeonardo said. These days, he visits the office about once a month. He looks through the books. He challenges the kids on what they’re doing. He offers guidance on the future.
“This is a child to me,” DiLeonardo said of his company. “This is actually my first child. So you never totally walk away from it. You watch it. You guide them wherever you can, but so far I couldn’t be prouder of what they’ve done.”
The last piece of advice from O’Hara is to have outside advisers – people who are not part of the family and not part of the everyday workings of the business. “Try to have a board with at least three members, and it should not be family members. You should pay them. They should meet at least two to three times per year, and they should study issues between those meetings,” O’Hara said.
The DiLeonardos don’t have an advisory board, but they feel like they have a good handle on how to run their business. Lehouiller said they try to separate management from ownership. As managers, they communicate constantly, in a very collaborative atmosphere. As owners, they work in ways many of their competitors cannot.
“Being a family business is a big differentiator for us,” Lia DiLeonardo said. “There’s an intimacy and a commitment when our name is on the door. There’s a sense of family ownership and service.”
Her sister agreed. “The family piece is so important to our culture,” Giana DiLeonardo said. &#8226

No posts to display