Family
Business Magazine E-Newsletter
March
18, 2008
Contents
1.
Lauders may be loosening control of their company.
2.
Wegmans' status as private company facilitated no-tobacco policy.
3.
Retired CEOs helping their kids build entrepreneurial ventures.
4.
Prospective successors must first hold meaningful 'real jobs.'
5.
Preview of Family Business
Magazine's Spring 2008 issue.
1. Lauders may be loosening control
of their company. According to a recent Wall Street Journal report, the
appointment of non-family member Fabrizio Freda as president of Estee
Lauder Cos. may be a sign that the family's "tight control of their
namesake empire, in which they retain a majority voting stake, may be
loosening." The article also noted several instances of apparent
tension within the family. CEO William Lauder, who eventually plans to
turn over his post to Freda, "describes being beset by family members
with differing agendas, long hours and fighting the perception that his
success is only due to his legendary last name," the Journal reported. The article said
that William's father, company chairman and largest shareholder Leonard
Lauder, "still looms large," while his uncle Ronald, an art collector,
has "relied heavily on borrowing against his Estee Lauder stock or
selling shares." The report described a prolonged July 2007 strategy
meeting to discuss whether to acquire French beauty company Ales Groupe
at which Ronald and Leonard disagreed and "William visibly waffled
between the two." The Journal
also noted that Ronald's daughter Jane
"remains a rising executive in the company." (Source: Wall Street Journal, Feb. 27, 2008.)
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2. Wegmans' status as private company
facilitated no-tobacco policy. Although supermarkets
recently have placed a marketing emphasis on healthful food, publicly
held chains are not likely to stop selling tobacco products, as
family-owned Wegmans has, according to a report in Fortune. Cigarettes and tobacco
carry margins of up to 50%, compared with just 1% to 3% for other
products, Fortune noted,
chiefly because tobacco companies provide "promotional discounts" --
cash payments to retailers to carry and advertise cigarettes.
"Privately held Wegmans has long refused such payments, which made its
decision easier," but public company executives would be reluctant to
take such a financial hit, the article said. (Source: Fortune, March 3, 2008.)
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3. Retired CEOs helping their kids
build entrepreneurial ventures. Rather than perfect their
golf swing or focus exclusively on philanthropic efforts, some retired
CEOs are finding fulfillment in helping their children grow their own
entrepreneurial ventures, Business
Week Small Biz recently reported. "No one can say for sure how
many veteran entrepreneurs have started companies with their kids, but
family business counselors expect this sort of enterprise to grow more
popular," the article said. Lloyd Shefsky, co-director of the Center
for Family Enterprises at the Kellogg School of Management, told Business Week Small Biz, "[I]f you
want to come out of retirement, this is one way to do it."
(Source: Business Week Small Biz,
February/March 2008).
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4. Prospective successors must first
hold meaningful 'real jobs.' "Sadly, many potential
successors shy away from line positions with real accountability,"
writes family business adviser Ivan Lansberg in The Family Business Leadership Handbook.
"These are the 'assistant to the vice-presidents' in family businesses,
who, as Machiavelli indicated, make the journey to the top 'as if they
had wings.' All too frequently they crash land, bringing down the
family company with them." To prevent, such a tragedy, Lansberg writes,
successors must "demonstrate their ability through unambiguous
performance at real jobs. Only through a track record of tangible,
measurable achievement -- ideally both inside and outside the family
company -- do they acquire the right to lead the business."
For more tips
on improving leadership skills and developing leaders in your family
and business, see The Family
Business Leadership Handbook. Learn more about the book and see
the table of contents here.
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5. Preview of Family Business Magazine's Spring
2008 issue. Watch your mailboxes for the Spring 2008 issue
of Family Business Magazine,
which will be sent to print edition subscribers this month. The issue
features a profile of third-generation NASCAR CEO Brian France as well
as insights from the Wente family, fifth-generation California
winemakers. The family owners of Olhausen Billiards discuss the
company's move from California to Tennessee, and why they found it
cost-effective to move 65 employees to the firm's new home. And we talk
to the Mullany family, makers of the WIFFLE ball, who are committed to
keeping their company in Connecticut even as they expand their global
sales.
You'll find the
complete table of contents for the issue here, and subscription
information here.
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Coming in Summer 2008: An updated list of
America's oldest family companies. Family Business Magazine's
acclaimed list of America's oldest family companies is among the most
popular features of our website, www.familybusinessmagazine.com.
Since our list was last published in 2003, we've learned of some
companies we had inadvertently overlooked; other firms were closed or
acquired and thus have dropped off the list. Our Summer 2008 issue will
feature our newly updated list. After publication, the complete list,
along with extra features, will be available online. Look for our
updated list of the world's oldest family companies in Autumn 2008.
The perfect Mother's Day gift.
A gift subscription to Family
Business Magazine will provide Mom with a full year's worth of
advice on growing the business while preserving family ownership and
family harmony. Gift subscription information is available here.
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