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The choice of a new generation

Melanie Stern is section editor of Families in Business magazine.

The end of succession by autocratic decree wasn't the threat it appeared. Career choice has paved the way for a uniquely business-savvy next generation – who join the fold because they're passionate about their family business. Melanie Stern reports

Apollonia Poilâne is crazy – about bread. It's obvious from the frenetic hand gestures that, as she answers questions about being CEO of iconic French bakery Poilâne, she's actually busy kneading dough in her head; her cheeks are blushed pink from the imaginary heat coming from the imaginary oven. Her passion for the job is exemplary.

Poilâne assumed control of the €15m plus company two years ago this November. Accepted to study economics at Harvard in Autumn 2002, her plan was to finish school and then join the company under the tutelage of her father Lionel, with whom she had just completed an apprenticeship, and become the company's first female master baker. Then her parents were killed in a helicopter crash – and the 18-year-old Apollonia immediately stepped up to assume leadership of the company.

There was no time for the luxury of grieving. "I missed my parents terribly, but I had two choices," explains Apollonia. "Either weeping for the rest of my life, or deciding that although it's really sad, there is nothing I can do about it – I might as well get on and try to ensure their company lives on."

Apollonia now manages Poilâne from Paris every school holiday, flying from Boston to Paris and London one weekend in six throughout term-time, checking in with her managers and meeting new clients – but spends one in every two days in the stifling claustrophobia of the bakery. One senses that the bosom of the underground oven rooms and the heavy, warm aroma of fresh bread is the place Apollonia retreats to find the soul of her parents.

Eliminating barriers
Women have played a crucial role in family succession through a crisis. Former publisher of the Washington Post, Katherine Graham – daughter of the man who bought and revived the newspaper in the 1930s – saved the day when her husband, a manic depressive who inherited the Post from his father-in-law, committed suicide in 1963. She became president of the company with no prior experience. "I had very little idea of what I was supposed to be doing, so I set out to learn," Graham recalled. "What I essentially did was to put one foot in front of the other, shut my eyes, and step off the edge."

Graham's father had overlooked her as a successor – he thought women didn't have the capacity to manage and that "no man should work for his wife". Time proved him wrong; shares in the Washington Post Company, listing at US$6.50 in 1971, had gained 3,315% by the time Katherine stepped down as CEO 20 years later – against 227% growth of the Dow Jones index for the same period.

Craigie Zildjian, CEO and 14th generation of music giant Zildjian Cymbals, found the distaste for female staff at her company more subtle, but no less evident. She is the first woman in Zildjian's 380-year history to lead the company as CEO, having succeeded her father in 1998. Her sister Debbie runs the manufacturing side and is guardian of the top-secret formula the family uses to make their iconic cymbals.

"Debbie and I will both tell you that women were not so much discouraged from being in the business, but it just wasn't really considered," Craigie explains. "There's such a long tradition of male leadership and as it involves a lot of bull labour – the percussion industry is still male-dominated."

The breaks
Despite this, Craigie's grandfather and mentor, Avedis, was of a more progressive mindset. He was the first to suggest to the sisters that they could lead the company one day. "It definitely felt to us like, 'wrong gender, right age', but my grandfather was ahead of his time and in a way, he was able to take a point of view that didn't have to conform to conventional wisdom. He always talked to me and Debbie about the female presidents of other big companies, and very much wanted to see the next generation in the business. So one day he invited me to step up to that."

Craigie's rise to the top was the culmination of a 28-year career beginning as a humble human resources junior, a role she says allowed her to become a 'change agent' in the company.

In 1994, having become general sales manager for North America with all sales and marketing teams reporting to her, Craigie was given a golden opportunity to prove herself as a leader. The non-family CEO resigned and Craigie was asked to step in to cover the six-month period of transition to his successor. Impressed with her performance and having already made his wish for her to take over clear, Craigie's father Armand asked her to stay on. But she declined, putting her young daughter first.

"That was the critical factor. It was such a big job, I felt I couldn't devote the necessary time to it and be the kind of parent I wanted to be," Craigie reveals. Four years later, Samantha was school-age and Craigie made her succession official.

Perhaps stepping up as an interim leader will turn into an official succession for Mark Mays, appointed this May as stand-in CEO of Clear Channel Communications while his father Lowry takes time out for health reasons. Mark was previously Clear Channel's president and COO for 9 years, so he's arguably well-prepared to succeed.

Prove your worth
Now that it is no longer socially acceptable to force children to join the family concern, successors today are afforded the opportunity to study, travel or work outside the family business. And as nepotism has become a piñata for shareholders of listed family corporates, proving one's worth outside the family company is widely encouraged.

The appointment of Rupert Murdoch's 31-year-old son as CEO of News Corporation's UK satellite arm BskyB last November, in which high-profile shareholders staged a revolt, puts such practices in the spotlight. As a public company, BskyB opened the job up to head-hunters, interviewing some 280 candidates and involving the non-family board of directors – but the eventual appointment of a Murdoch boy smacked of good old familial cronyism.

"The general view [of James Murdoch's appointment] was that the board was just going through the motions and that the non-executives were weak. The selection process seemed a charade," says Jonathan Guthrie, companies columnist for the Financial Times. "The City doesn't like big entrepreneurs who float their businesses and then appoint their children to positions of power. It looks too much like nepotism; they want a transparent and meritocratic affair."

Despite having led News Corp's Asian satellite business STAR to break-even in 2003 for the first time since inception, James' suitability for the BskyB role generally fell to the wayside in media coverage. In his examination of the case for an essay on nepotism in Australian commerce, published by Melbourne broadsheet The Age, journalist Gideon Haigh indulged a typical sentiment: "to fill the vacancy for a chief executive officer at the British satellite broadcaster, chairman Rupert advanced the claims not of a loyal lieutenant but a favourite son — James, 30, who had been overseeing News Corporation's Asian television interests but who, in commercial terms, had yet to shed his executive puppy fat".

Strangely, though, no one croaked when Fiat elevated John Elkann, 28-year old grandson of Gianni Agnelli (equally experienced in his sector at a senior level despite his youth) to vice-chairman of the company, alongside CEO Sergio Marchionne and chairman Luca Cordero di Montezemolo.

"You have to remember that some children of entrepreneurs can actually be pretty handy themselves," Guthrie concedes. "But if shareholders think they see a weak candidate from the family – someone who hasn't got market smarts and who has been forced on them simply to keep the old man happy, they won't like it and will vote against it."

As the trend for succession planning becomes mainstream, many families now work requisite periods of independent employment and levels of experience into their written family constitutions.

Owners of €200m Spanish construction and architecture company Edival, the Puchades-Carrasco family, are doing just that. Chief executive and second generation Manuel is developing a career development programme for members of the third generation, focusing first on being an active shareholder, and then bringing in the possibility of joining the company in a senior role. His daughter Mar, 29, is the eldest of five in the third generation and so far the only one qualified in a related field, as an architect. She currently works as an associate with a Valencian architecture firm.

"Preparing for a succession is the next step we'll have to face soon," says Mar. "But I've only been working for a year and I feel that I need a lot more experience before deciding whether to join."

The 15th generation of the Zildjian dynasty, Craigie's 17-year-old daughter Samanatha and her graduate nieces, Cady and Emily, are already shareholders and will enrol in the company's mentoring programme to learn more about the company before considering joining. But, like the Puchades-Carrasco family and many others, they're the first family generation bound by formally agreed entry criteria to gain outside management experience first, "and know what it's like to have a boss, which is difficult if you join the family business directly," warns Craigie. It's also a great insurance policy for the company. "We say, 'make your mistakes somewhere else' – then come into the business with some credentials rather than as a product of straight nepotism."

Apollonia Poilâne is keen to explain that her position is one of her own choice, rather than necessity or expectation. Her father was famously forced into the business after being taken out of school at age 14, and he in turn became acutely aware that his daughters should choose their own path. "My parents were the most amazing people and I want to show them that they didn't work their whole lives for nothing – but that should not be misunderstood," she explains. "I wanted to take on the challenge of doing both my studies and running the company, as I planned to take over from a very young age anyway. I do this for myself and not for my parents, because it's what I love," she says.

Change is good
What continues to resonate with most successors today is a genuine respect for their predecessors' values and their desire to keep those alive. They find a way to balance that with enacting their own designs on the company.

Brian France – last October crowned chairman and chief executive of Florida's stock car racing titan NASCAR on the retirement of his father, the venerable "Big Bill" France – makes no bones about his readiness to shake a few things up after his 30-year career climb, starting in the pits at a regional NASCAR dirt track. But he keeps his father's work in sight.

"I think one of the things people are going to notice right away [about my plans to put my own mark on the company] is that we're going to move fast in making some decisions," Brian explains. "There are hundreds of people in our organisation who are talented, dedicated, and I'm looking forward to giving them all the resources they need to keep producing great results. I share the vision, beliefs and traditions of my father and his father before him – and I have my father just down the hallway with all the experience I can draw on at any time," Brian explains. "But above all, this sport has to grow and get better and better."

In his first year as CEO, Brain's stance on issues like sponsorship and TV deals have been met with criticism, and suggestions that the next generation is losing focus on the core activity of the company. "NASCAR is an industry that needs you to reach out and get ideas, and we are going to be open-minded to change," is Brian's response.

The complexities of the family business model and its transition between generations can provide not just hurdles for successors, but also dead ends.

Jim Olan Hutcheson, third generation of leading American photo-portraiture company Olan Mills, found the door to the CEO's office locked from the inside. In 1994, after a 19-year career with the company culminating in his appointment as head of Olan Mills' national studio business, Jim found he was unable to climb any higher. His two uncles had been co-presidents of the company for some time and it was clear they weren't about to stand down. "I had gone as far as I could in the company. My uncles were very much ingrained and doing good work, and they were not ready to hand the reins to me or anyone else any time soon," Jim recalls. "I found myself with a choice. Do I stay in a holding pattern? Kill time for another 10 years or more? Or move on?"

Unbeknown to him, Jim's next move had coincided with the end of his career at Olan Mills.

His uncles had brought in a family business consultant on unrelated business issues. Jim noticed the lack of consultants in the field who had actual experience of operating a business; he identified a niche he could fill. "It just seemed like there was an opportunity there to combine my professional background, academic credentials, and forge a stake in the family business consulting world," Jim says. "I had always dreamed of having two or three distinct careers and at that time I was ready for my second move." In 1995, Jim left and founded family business consulting firm, Regeneration Partners.

"One of the drawbacks of a family business is that quite often you get sucked into it at an early age. And it happened to me as well, although I loved what I did over those 19 years. But you basically become an expert in one thing and I wanted a broader experience in life than that."

Although few would admit it, there are probably some family business members reading this who would have settled for Jim's first two options rather than go out on a limb. But as is often repeated within the sphere of family business, what drove him – and what should drive children to consider succession – is simply a genuine desire to be part of an activity that excites. "Any family members that want to join the company must demonstrate a passion for it," concludes Craigie Zildjian. "Without that, any work would be very mediocre."

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