In this issue
In 1965, Marriott opened its fifth hotel, a 500-room convention facility two blocks east of historic Peachtree Street in downtown Atlanta. The huge project was designed to put Marriott on the map as a hotel company, and we poured all of our energies into creating a showcase property. Just as we were putting on the finishing touches, we learned that another hotel under construction not far away was up for sale. At the invitation of the architect and developer John Portman, a team of Marriott hotel people toured the site.
Hermès SA, the French manufacturer of upscale silk and leather goods, is known as one of the world’s most elegant businesses. Through five generations, the family owned company has carefully protected its brand image, earning a reputation for combining quality materials with time-consuming hand craftsmanship. Hermès scarves are considered collectable works of art by some observers. Its perfumes, handbags, and ties command premium prices.
I was listening to a very discouraged CEO, George Donnelly Jr. of DonCom Inc. The usually energetic leader, fiftyish and in good health, sagged in his chair. The family business was continuing to grow, and Donnelly, a grandson of the founder, needed help. His plan to bring in a nonfamily chief operations officer to share the load had been thwarted, even though the board supported it. He and the outside directors had concurred that nobody inside (family or not) was anywhere near qualified for the job. Perhaps later, but not now.
When people in the business world speak of corporate governance, they usually mean boards of directors. More and more family business owners, however, have begun to appreciate that continuity in the business, and their ownership, requires other forums as well. Governance of the family is serious work, requiring dedication, zealous effort and, for many family members, time out from other income-earning opportunities.