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When top jobs stay in the family

By Financial Times
March 05, 2009 10:22 IST
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Peter Chernin, Rupert Murdoch's closest lieutenant, last month announced he would step down from his role as president and chief operating officer of News Corp when his contract expires in June. He gained a reputation as one of the industry's most talented managers yet was highly unlikely to reach the top job in the Murdoch-controlled media empire.

The story highlights a broader problem for family-run businesses. How can they attract the best non-family executives and keep them motivated when the path to the top is blocked? Is the only solution to offer a bigger pay package?

The academic
Roger Martin
The way to attract the best non-family executives is to reframe the job of running the business as non-executive chair rather than chief executive.

Chief executive of a globally competitive company is an all-consuming job that requires a rare mix of capability and desire. It is a stretch to imagine that sons or daughters of the founder will be as talented and willing to commit to the business as the founder was. Think of how few successful chief executives of global companies were born rich.

The superior role is for the offspring to show stewardship for the equity stake of the family by serving as non-executive chair, thereby creating no blockage for talented managers like Peter Chernin. As a long-time Thomson Corporation/ Thomson Reuters board member, I may be biased in favour of the path Ken Thomson chose to manage the family succession following his father Roy Thomson.

He stepped back to chair the board, focusing on finding the best chief executive possible and ensuring that the successful candidate had the support of the family in making the smartest long-term decisions for the company.

The writer is dean of the Rotman School of Management at the University of Toronto

The executive
Miles Templeman

Many family businesses bring in executives to senior positions - even to the top spot - when there are no suitable family candidates on hand. This is a natural process and is far more common than the recent example of News Corp suggests.

High-calibre managers will be attracted to a company because they think it offers a rewarding career in a growing business - in spite of the limitations imposed by a family ownership structure. Moreover, well-run family companies often have attributes that count in their favour, such as a more personal culture. No special incentives are needed to reel in and motivate talented outsiders.

For most family businesses the decision to bring in an outsider is not the problem: it is choosing the right person for the job and making sure that the family members with board and executive responsibilities handle the transition well and create the right environment for the newcomer to lead the business.

The writer is director-general of the Institute of Directors and chairman of Shepherd Neame, where the family has a majority shareholding

The family business expert
Grant Gordon

Many successful family firms rely heavily on non-family managers and executives, and are all the better for it.

The core family business values of long-term investment, entrepreneurship, active social responsibility and stability are integral to the success of a family business. However, in order to grow further, external experience and skills are vital and it is important that these resources are retained within the business.

The presence of non-family directors on the board (executive and non-executive) is a good indication of a successful family business, which will benefit from outside knowledge and talent.

In order to maximise the benefits of external contributions, family businesses must be aware of the need to give non-family executives genuine accountability and tangible input to strategic decision-making. Making these individuals feel as much a part of the business as family members is a key way of ensuring loyalty and long-term stability - high salaries and bonuses are not the only way to keep the best and the brightest working in the family business sector.

The writer is director-general of the Institute for Family Business

The consultant
Peter Cheese

In family-run businesses, nurturing and retaining good leaders at all levels is fundamental, as it is to any business. A particular challenge for companies with family members in managerial positions is in keeping it an open race for others to reach the most senior levels.

Non-family executives need to feel they are being treated fairly and have the same degrees of influence, even if the top job is not available. If they don't, then they will likely leave well before the issue of the top job comes up.

Creating this environment requires an open leadership culture, starting from the top. Everyone should understand their roles and responsibilities, what career paths and options are open to them, how they will be fairly rewarded - including encouraging their sense of ownership of the business alongside family members - and that they are engaged in well-defined decision-making processes.

Peter Chernin was recruited to Fox in 1989 and was duly promoted, working alongside Rupert Murdoch for almost 12 years, so it would seem that in this regard News Corp has been successful.

The writer is managing director of Accenture's talent and organisation performance practice

Copyright The Financial Times Limited 2009

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