A large family business was recently faced with a dilemma that confronts many family firms. Two senior family leaders died in quick succession, leaving no family member qualified and ready to assume responsibility.
Faced with this quandary, the owning family turned to a trusted non-family executive with whom their relationship extended over four decades. Linked to the family since his teens by his friendship with the son of the business leader’s sister, his talent was recognized early. The business leader gave him the first of many managerial assignments when he was in his mid-20s, mentoring him to prepare him for ever-greater responsibilities. Now in his mid-50s, this executive headed a key business unit in the family firm when first the leader passed away. Less than a year later, the leader’s brother also died. An heir apparent had died prematurely some years before and the only other family candidate was a 28-year-old grandson with potential but without adequate experience.
In short order, the family agreed that the non-family executive should become chairman. He had carefully developed his relationships with family owners over many years and was viewed as practically family. Said the mother of her son’s lifelong friend: I consider [him] as if he were my son.
His view of his responsibility as chairman undoubtedly struck the right chord with the family. He sees his job in part as a mentor and protector of the family’s newest generation, whose members have yet to gain the experience for their likely legacy. In relation to the 28-year-old grandson, who was named vice-chairman, he said: What I try to do is to let John grow up.
This story demonstrates the importance of non-family key executives and their relationships with family owners. It also shows how non-family executives can take responsibility for mentoring and developing family leaders and maintaining the family’s legacy. These lessons hold for family businesses, regardless of size.
The family business in this case is large and famous. The new chairman is Luca Cordero di Montezemolo, whom the New York Times calls the viceroy of the Agnelli family. He was chairman of Ferrari, a subsidiary of the Agnelli-controlled Fiat Motor Company. When Umberto Agnelli died shortly after succeeding his legendary brother, Giovanni, as Fiat chairman, the family tapped Montezemolo. He remains chairman of Ferrari and has since become head of Confindustria, Italy’s manufacturers association. He now is arguably the most important individual in Italian business.
In that role and based on his experience in the Agnelli family business, he is offering advice to the small and medium-sized family businesses that dominate the Italian economy. Appointing managers purely for their family ties could be a mistake, he says. Develop good managers, regardless of their family status. If not, family becomes a limit to the development of the company, he explains, a situation he rejects as the feudal approach.
That advice applies not only in Italy, but to family businesses all over the world.