chapter 2 first leadership imperative the mandate to build institutions of governance and manage the...
TRANSCRIPT
Chapter 2
First Leadership ImperativeThe Mandate to Build Institutions of Governance and Manage the Transfer of Power
Family Business, First Edition, by Ernesto J. PozaCopyright © 2004 South-Western/Thomson Learning
2-2
The Ultimate Challenge
A healthy business … A healthy family … That will continue from generation to
generation
F M
O
2-3
CEO and Governance
Governance can include Advisory or statutory board with independent
outsiders Family meetings or family council Family participation and employment policies Key nonfamily executives
Current generation CEO builds institutions for governance and then passes the torch
2-4
Transfer of Power
CEOs must be architects of transition Transfer of power can be problematic when
CEOs don’t want to leave CEOs fail to prepare next-generation members for
leadership Succession is triggered by illness or death of CEO
Transfer of power must be uniquely designed for each family and business
2-5
Succession and Continuity
Requires CEO committed to company rather than own agenda
Enlist “right people” and strategies to create continuity plan for business “Right people” in top management team and
governors of shareholder group Complemented by board members and outside
advisors
2-6
CEO Exit Styles
Monarchs Don’t leave until forced out Imagine no one could ever replace them
Generals Leave office reluctantly and plot return Hope next-generation leader proves inadequate
Ambassadors Allow others to learn business and then manage it Hold onto diplomatic duties for company
2-7
CEO Exit Styles, continued
Governors Lead for a limited term, then move on Ensure successor will be trained and ready
Inventors Return to development activities Take a key position in another enterprise
Transition czars Provide active leadership during succession
process
2-8
Implications of Exit Styles
Monarchs and generals worst enemies of succession
Monarch and general behavior may impact average tenure of family CEO: 17 years
Other exit styles allow for orderly transition to be planned and executed