Carlos Slim became the richest man in the world last week, making him patriarch of, arguably, the most successful family business in the world. But while he clearly has the knack for making money, his succession planning is yet to be tested, write Alexandra Sharpe and Shonali Sashikant.
In any family business, the next generation feels some pressure to live up to the previous generation. But how will Señor Slim's three sons (Carlos Jr, Marco Antonio and Patrick) fare in the shadow of their charismatic father who has amassed an estimated fortune of $53.5 billion and, depending on who you talk to, is either a hero or villain?
Although Slim did not start from a humble background (his Lebanese father built a dry goods business at the beginning of the Mexican Revolution in 1911 and subsequently purchased considerable real estate holdings), his business success cannot be disputed. His empire includes more than 200 companies in a variety of sectors, including holdings in Saks Fifth Avenue, The New York Times Co and various telecommunication companies.
It is clear that he inherited his business savvy from his father, but the old saying "father –merchant, son – playboy, grandson – beggar" is unlikely to apply here given the massive wealth involved. Nevertheless, Slim's heirs should be prepared for the different challenges that creating and preserving wealth involve.
Carlos, who used to be a maths teacher, taught his three sons about economics and involved them in his business and investment decisions from an early age. While they each now play important roles in the group under the watchful eye of their father, they have always been included. It is even reported that at the age of 12, youngest son Patrick was consulted on whether to purchase cigarette maker Cigatam (which he duly did).
As far as succession planning goes, this is progressive. Actively coaching and mentoring the next generation is a key responsibility for any family business leader committed to a successful transition, and learning about the business from a young age builds understanding and commitment.
That said, very often in a family business situation, as the business grows and the family extends, the skills needed from one generation to the next are very different. The heirs of a successful entrepreneur like Slim will have to work very differently from their father.
For example, they will need to understand how to work together, compromise, speak with one voice to their employees and management and implement wealth preservation strategies as well as create new revenue streams. Slim has had to do none of these as a controlling owner and so his heirs must learn these skills from elsewhere.
It is joked that you can't go a day in Mexico without putting a dollar in Carlos Slims' pocket; with little space for further expansion in Mexico, the family will increasingly be looking for international investments. The problem is that all three of Slim's sons were educated in Mexico, and their business training has consisted of learning on the job from their father.
While Slim has been criticised for being ruthless in business, in his family life, the indications are very different. Slim enjoys regular meals with the entire Slim clan every Monday evening. In addition, before breakfast each morning, Slim speaks to his sons and sons-in-laws (he also has three daughters whose husbands are involved in his empire) to get up to speed with each of his companies and to prepare for the day ahead. This bodes well for the Slim family succession: intergenerational communication is important.
If a business empire is to survive and thrive across the generations, a common understanding and shared vision is needed and spending time together both within the business and outside of it is thus critical.
There are many factors that contribute to a successful succession process and it appears that Slim and his family have got many of these right, with family unity, learning and communication at the centre of their modus operandi.
Eldest son Carlos Slim Domit has so far been successful in opening up new opportunities in the US, but the brothers will have to work hard and work together in order to successfully take over from their father, take the family business to the next level and retain the family's position on rich lists around the world.
Picture: Carols Slim Helu and Carlos Slim Domit with fellow family-business leader Alessandro Benetton