Rockefeller’s greatest decision
A matriarch in her 60s writes: My husband and I started a manufacturing business that is growing. But our only child (Harry, not his real name) does not want to be CEO. Harry obeyed us at first. He studied business and worked for banks before working for us for five years. But now Harry wants to study art, teach in school, be with his kids who are already in college! He wants to do CSR (corporate social responsibility) rather than head our business even if he is trained. He wants our trained professionals take over daily operations. We are not happy. Please help.
I can understand your frustration. Your son seems to be turning his back on his legacy, handing over the family business to outsiders. You have no other kids, so you fear that your business might not last. A pity, you think, since your business is growing.
But I can also understand Harry. Life is difficult, and often, we have no choice but to work at something we don’t love.
But why let our dreams die if we have a choice? Harry has been compliant, but five years is enough to realize that he is not cut out for a manufacturing business. He loves art, philanthropy, teaching—all worthy pursuits.
He may also want to make up for lost time with his kids. Maybe his children will soon enter the business and take over in the future. Hopefully, your business will remain in your family.
Harry has worked with you for a while. I assume that he is trained to be an owner also, not just a manager. By virtue of owning shares and having a significant financial stake in the business, an owner needs to know enough to set the vision and mission, with details and operations to be implemented by the CEO, general manager or other management.
Does Harry possess such knowledge and ability at least? I presume so. If not, tell Harry that he has a responsibility to ensure the business does not deteriorate, because it is not just his inheritance, but also his children’s.
You, your husband and Harry are on the board, possibly with other partners too. Eventually, Harry would be on his own, unless his kids are old enough to join him when you leave.
In the meantime, Harry must be able to think, act, plan, decide as an owner, keeping the longevity and profitability of the business in heart and mind. Harry seems to have the aptitude and training for this. If not, you may have no choice but either to sell your ownership stakes (and his) to your partners or to liquidate the business altogether.
As an owner, but not day-to-day head, Harry can have the time to pursue his interests, while still keeping tabs on the business, run by professionals. He can head your CSR now, while you oversee the business with the help of non-family professional executives and holding the fort until the next generation joins the business.
Take the case of the Rockefeller family, famous for Standard Oil. Although John D. Rockefeller Sr. wanted his only son Junior to take over, Junior was shy and chose to do philanthropy rather than lead the empire.
“America’s wealthiest man, with only one son, [agreed] that the son was not obliged to follow the father’s dreams,” says James E. Hughes Jr. in his book “Family Wealth.” “The father’s willingness to free his son to follow his individual pursuit of happiness is one of the best long-term wealth preservation decisions in history. [Senior] continued for the rest of his life to do what he loved, thereby adding immeasurably to the family’s intellectual and financial capital. [Junior] urged each of his children to find work [they desired] … The Rockefeller family understands that its wealth lies in its human and intellectual capital, and that its financial capital is a tool to enhance the pursuits of happiness of its individual members.”
Abby, the eldest in the third generation, became a philanthropist. The five so-called “Rockefeller brothers” wielded business, social, political influence in the US for a century: John III a philanthropist, Nelson a US vice president, Laurance a venture capitalist, Winthrop a governor, and David a banker.
The Rockefeller empire is strong, overseen by trusts, managers, boards. Most of all, Rockefeller is synonymous not just with oil but also with philanthropy (Rockefeller Foundation, UN headquarters), education (University of Chicago, Central Philippine University), arts (Museum of Modern Art), conservation (Grand Teton, Yosemite National Parks).
Let trained professionals run the business. Ensure that Harry becomes a responsible owner but release him from CEO duties and entice the next generation to join the enterprise.
Queena N. Lee-Chua is on the board of directors of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail [email protected]). E-mail the author at [email protected]
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