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I worked for some years as a consultant to a large conglomerate that had been under family leadership for over three generations. On one occasion, I had finished a talk to a group of senior managers of the company, when a senior Vice President came up to me and said he wanted to have a word with me. “Mr Vieira,” he said. “I will not be here when you come back in two months. I am retiring from the company after forty years of service. This is the only company that I have worked for in my lifetime. I started as a junior engineer, and have ended my career as the Vice President of Engineering. And during this time I have seen three generations of Chairmen – each one so different from the one before, even though they were all members of the same family.” He went on to tell me this story:
“The first generation member was the great entrepreneur, a grand old man, known throughout the country as a doyen of industry. He was a highly intelligent and sharp man, with a photographic memory to boot, and yet he was warm, with an all-pervading human touch. He made quarterly visits to all the large manufacturing units, with all the data prepared in a small diary even before he arrived. And woe betided to any manager who gave him inaccurate data in reply to his queries. In contrast to his business demeanor, he always hosted a dinner on every visit where all the managers and their wives were invited. Astonishingly, he knew the names of all the wives and even of some of the children, as well as information about what they were doing in their school or about their college careers. The conglomerate grew under his benign guidance and became one of the largest in the country.
When the founder died, he was succeeded by his son who had graduated from one of the best universities in the USA. Like his father, he also worked hard, and was diligent and sharp – but unlike his father he had little time for niceties. There was an obvious distance between him and his generals, and certainly between him and his foot soldiers. The quarterly visits to review operations continued under his watch, but were largely different from those of his father’s. He arrived in the morning, attended a series of presentations through out the day with only a short break to have a working lunch. Throughout the day, he made comments and suggested corrections. In the evening, he promptly flew out in his private plane to be back home for supper. There was neither time nor the inclination to host dinners to meet the wives, or to meet with the other managers who he had no work interaction with during the visit. In spite pf this, the son did carry the corporation to greater heights on a solid foundation built by his father; He had not failed the family!
He was succeeded by his son, also a graduate of a foreign university – whose management style was a complete departure from the predecessors. He never made plant visits, but instead he surrounded himself with a group of trusted advisors. Like his father, he made quarterly presentations, but now the managers had to fly to Headquarters to participate before the Chairman and the Advisory Group. Social interaction were minimal, except for a few, perfunctory exceptions. The chairman retained a distant and remote image, and this image was perpetuated by the employees as well as the media. In the midst of all this, the conglomerate continued to grow.”
The tale of these three generations represents a fascinating study as each generation is a product of their respective contemporary environment. Every following generation became increasingly isolated and insulated like royalty in the days of the French King, Louis XIV. The question then becomes, “How can this increasing divide be prevented when the corporation becomes too large to allow for personal contact between the management and the rest of the company? It is a question to reflect on.
Management gurus increasingly cite “people” as the key to success for corporations. In this context, people refers to both employees and customers. In the book, “In search of Excellence”, Tom Peters write of CEOs who spend time every month working at the front end in order to get a feel for “people”. Top management in family companies can easily be in danger of going in the reverse direction, and so they must be vigilant and careful to ensure that they avoid this tendency which could become a pitfall.