The chief financial officer of Tyson Foods made a confession to investors this week. After reviewing his earnings, John Randal Tyson added a personal note: “I’m sure you’ve seen the news about the incident involving me. I am embarrassed and want to let you know that I take full responsibility for my actions.
The news was that the 32-year-old son of Tyson’s chair, and great-grandson of its founder, had been charged with public intoxication and trespassing after a stranger found him asleep in his bed in Arkansas. Rather than fire him – the likely fate of any non-family member – the US company has asked its directors to review his behavior.
“Remember, he’s been involved in this business practically his entire life,” Tyson chief executive Donnie King replied when analysts asked why Tyson Jr. was in a position normally held by seasoned executives in the industry. fifties. That’s true, but that’s usually the qualification to become a king or queen, rather than the CFO of one of America’s 500 largest public companies.
Red Bull has handled its own estate more wisely, appointing three executives to succeed founder Dietrich Mateschitz after his death in October, rather than his son. “I don’t believe in being both an employee and a shareholder in the same company,” writes Mark Mateschitz, who inherited his father’s 49% stake in the Austrian energy drink maker.
That doesn’t mean the scion will leave others alone to run operations, including Red Bull’s Formula 1 team. “I will . . . express myself in a way that makes sense to me and that I feel is necessary,” he said as he became co-owner alongside the Yoovidhya family of Thailand. hire and fire others than do their job yourself.
Succession is the most emotionally taxing issue for entrepreneurs. As they get older, will they sell their businesses to strangers or name one of their sons or daughters both heir and boss? The challenge looms for many 20th century founders: More than 1.5 million owners of small and medium-sized family businesses in Germany are approaching retirement.
The struggle is evident in public companies that remain under family control, such as Fox Corporation and News Corp, both dominated by 91-year-old Rupert Murdoch. He installed his son Lachlan as his likely successor after decades of family maneuvering, faithfully caricatured in the HBO drama Succession.
Bernard Arnault also seems to favor a family game. His five children now work at his luxury group LVMH and he has extended his mandatory retirement age to 80. It gives time for a face-to-face meeting and invites the kind of speculation about who will succeed him that Lachlan Murdoch once described to me as “a pain in the ass”.
I can see why this kind of contest attracts the patriarchs: in the manner of King Lear, they entice their adult children to swear loyalty and affection, and use it to reinforce their control. If you’ve been a business for many years, the thought of it being run after your death by a mercenary with an MBA must be infuriating.
The benefits for the younger generation are less obvious. If several are vying for advancement, it seems like a surefire way to ruin family gatherings. Even if there is only one child, the awkward question remains: would this person stand a chance if it weren’t for their name? The answer is usually no.
This is not to deny that family control has certain advantages. Family businesses are often more profitable and have a longer-term view than businesses run by professional executives for many investors. Having someone in charge who instinctively loves the company and was raised to value their purpose can be a strength.
Nor is it absurd that family members likely to inherit stakes in companies get to know them inside out. Whatever happens, John Tyson has received a hard lesson in how leaders of public companies should behave and in the discipline of investor scrutiny. It is healthier to be publicly shamed than to remain a gilded youth, idly waiting to inherit.
But this does not necessarily imply that successors are managers as well as owners. A study of Danish companies found that family successions perform worse than Red Bull’s approach of installing professionals to succeed the founder. As majority investors, families retain a lot of power to influence companies anyway.
Some heirs have understood this: John Elkann, a descendant of the Agnelli family which controls Ferrari and Juventus, does not run them himself but supervises them through their boards of directors and his family holding company. Marta Ortega Pérez, daughter of the Inditex founder, became president of Zara’s parent group last year, but day-to-day responsibility falls to a chief executive.
It’s natural. After years of observing how corporations work, many members of the emerging generation must have noticed that being publicly accountable for everything has its downsides. Becoming the successor doesn’t require running the whole show.
#successful #family #business #succession