Family
Business Magazine E-Newsletter
December
4, 2007
Contents
1.
Michelin's fortunes improving under new leader.
2.
Reliance's Ambani said to pass Slim, Gates to become world's richest.
3.
Survey: Conn. family firms concerned about succession, sustainability.
4.
Entrepreneurs may lack essential mentoring skills.
5.
Holding family employees accountable.
1.
Michelin's fortunes improving under new leader. A year and
a half after its 43-year-old fourth-generation leader, Edouard
Michelin, drowned in a fishing accident in the summer of 2006, Michelin
has unveiled a new line of Energy Saver tires that are said to help
drivers cut fuel costs while reducing carbon dioxide emissions,
according to a report in Forbes.
Before he died, Edouard Michelin had developed a "long-overdue"
productivity plan for the French tire company, the article said. The
company's "high-minded focus on technical excellence has over the years
made the paternalistic firm dismissive of more earth[l]y targets --
such as decent shareholder returns," Forbes
reported. But since Edouard's death, the company's stock has
doubled, the report noted. "Michelin is publicly traded on the Paris
Bourse ... and the extended Michelin family is believed to have only a
minor stake," the article said. "But the public shareholders are
considered mere 'limited partners.'" Edouard Michelin worked with two
managing partners, one of whom had retired at the time of his death.
The remaining partner, 62-year-old Michel Rollier, a distant relative
and a "key architect" of the productivity plan, was named to succeed
Edouard. During the first half of 2007, company managers exceeded
Rollier's profitability goal, the article said. (Source: Forbes, Nov. 26, 2007.)
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2. Reliance's
Ambani said to pass Slim, Gates to become world's richest.
Mukesh Ambani, the major shareholder in Reliance Industries, Reliance
Petroleum and Reliance Industrial Infrastructure, passed Mexico's
Carlos Slim and the U.S. Bill Gates as the world's richest man on Oct.
30, "thanks to the bull run on the Bombay stock exchange," Business Week reported. Ambani's
net worth is now about $63.2 billion, according to the report. The
article estimated Slim and Gates' worth at about $62.3 billion each. An
August profile of Carlos Slim in Fortune
had estimated his net worth at $59 billion and Gates' at $58
billion. (Sources: Business
Week, Nov. 12, 2007; Fortune,
Aug. 20, 2007.)
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3. Survey: Conn. family firms
concerned about succession, sustainability. A recent
survey of Connecticut family businesses found business succession and
future sustainability to be important topics. Executives from 641
companies responded to the survey, which was conducted by the
Connecticut Business & Industry Association and the University of
Connecticut Family Business Program. Among the most difficult
management challenges cited were strategic planning (named by 20% of
respondents), employee training (18%), communication (14%), business
succession issues (12%) and financial planning/budgeting (10%). Sources
of conflict most often cited were issues surrounding succession (24%),
perceived competence of family members working in the business (24%),
compensation (20%), lack of communication within the family (20%), and
lack of communication between family and non-family managers (13%).
Less than half of the respondents (39%) said their company has a
business succession plan; 36% said they intend to develop a plan within
the next 24 months. Nearly two-thirds (62%) said maintaining family
control of their business is a priority, but only 50% said it was
either extremely or somewhat likely that their company would remain
family-owned in the future. One-quarter of the respondents said it is
somewhat unlikely or not at all likely that their business would
continue to be family-run, and another 25% were unsure about their
company's future ownership structure. When asked what qualities they
would seek in a successor, only 24% listed family membership as among
the most important.
The Winter 2008
issue of Family Business
Magazine, due to be mailed to subscribers this month, will include a
sampling of results from the American Family Business Survey, a
nationwide study conducted in summer 2007. Visit our website for subscription information.
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4. Entrepreneurs may lack essential
mentoring skills. "Entrepreneurs and high-powered
executives tend to be intuitive decision-makers.... When asked to
describe what they do, they're likely to underestimate the complexity
of the tasks they tackle every day," writes family business adviser
Mark Voeller in The Family Business
Mentoring Handbook. "They're not prone to spend time analyzing
what information they need to make a decision and how they know what to
do. In other words, mentoring doesn't come naturally to them." Voeller
cites eight essential skills entrepreneurs need to master in order to
effectively mentor potential successors:
- Self-awareness.
- Involving
others in decisions.
- Listening
and inquiring.
- Maintaining
confidentiality.
- The
ability to partner.
- Being
candid.
- Remaining
objective.
- Setting
goals and measuring achievements.
For details,
and for other advice on grooming and mentoring successors and other
stakeholders, see The Family
Business Mentoring Handbook. Learn more about the book and view
the table of contents here.
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5. Holding family employees
accountable. "Management research has shown that one of
the key strategies for enhancing productivity and employee morale is
systematic performance management. Yet few family companies take
advantage of this strategy," writes family business adviser Leslie
Dashew in Family Business Agenda,
a new annual publication from Family
Business Magazine. "Creating a culture where family members are
held accountable can be difficult." Dashew offers these suggestions for
family leaders who wish to make this change:
- Articulate
the vision for the business and explain how continued improvement of
performance contributes to this achievement. Communicating this
practice to the family as well as to non-family members lets everyone
know that working in the business is a privilege, not a right.
- Establish
a system of performance management beginning at the top. The family
leader can be reviewed by the board and/or leadership team through a
360-degree process. Then the leader should review each employee
reporting to him and document this review in personnel records.
Further, the leader should discuss the reviews conducted by his direct
reports to ensure they are being completed and are thorough.
- Implement
consequences for non-compliance. In some cases financial rewards can be
connected to performance.
- Support
managers who are concerned about fallout from confronting family
members' underperformance. Coach them about how to do this in a
constructive fashion and assure them they have your backing.
For more
information on this and other issues related to employment of family
and non-family members, see Family
Business Agenda. Subscribers to Family Business Magazine receive
this publication free of charge. Visit our website for subscription information.
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