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Family business: Lessons from the papacy

Thursday, March 28, 2013
Family business
Pope Francis I

Like millions of fellow Catholics and others, I have been watching with deep interest the historic resignation of Pope Benedict XVI and the installation of Pope Francis I. I viewed the events through different lenses, that of my personal faith convictions, the future of the church, the politics of the Vatican, and almost inevitably, succession in family business. The election of the spiritual leader of over one billion people is clearly on a different plane from the installation of a successor in a family business, and I mean no heresy as I make the comparisons.


Retirement vs death


Like popes of the last few centuries, many family business owners never retire. American surveys show that 1/3 say that they will retire, another 1/3 say that they will “semi-retire”, whatever that means, and 1/3 admit that they will only go from the position when God calls them home. 


As a consequence, fully 2/3 of family businesses have no succession plan and no successors identified, far less in stages of preparation. Like the Vatican, there may be a select group from whom the successor is to be chosen and often, there is no clear front runner. Over the years, there are meetings at which the Cardinals size each other up, but the topic of suitability for leadership is likely muted and no overt discussions are held till the Pontiff is no longer there. For some family businesses, the modus operandi is the same. 


Some business owners seek to include in their will not only ownership succession, but leadership succession. In fact, they frequently collapse the two, giving one child majority ownership and anointment as leader. And too often business and families are thrown into turmoil when the CEO dies. Some of them do not even survive the event.


Pre-conclave considerations


It is instructive though that before the papal election, there were many private meetings of the entire group to reflect on the needs of the Church going forward and presumably to define the desired characteristics of the next pope. Family businesses will do well to emulate that practice and start it very early. There should be open discussion of the needs of the business in the future, the desires of family members, and the availability and suitability of family members to take over the reins.


Apparently, at the Vatican, there is the possibility that the Pope could come from outside the College of Cardinals. In practice, that has not happened in the modern era. However, the cache of candidates within the group of cardinals is large and varied, they are all leaders, and acceptance of the responsibility of the top leadership is an expectation of the position. The elected pope simply says “ I accept” and his work begins. And much is being made of the fact that the current pope is not a Vatican official. 


There are often no family members who are able or even willing to lead the business, yet families continue to resist non-family leadership in the business. That could be most destructive to the business as they install often unwilling if not incompetent family members to the top post. Membership in a business family does not automatically translate into family business leadership skills. The business and the family may be best served if an “outsider” gets the job.


In the Caribbean, few businesses have installed professional non-family leadership and it is time for that barrier to be broken. This is the first Pope in centuries to come from outside old world Europe. Might more family businesses make the move to appoint non-family member CEOs? 


Installation and consultation


The official papal inauguration—with all its pomp and circumstance—serves a multitude of good purposes: ceremonial passing of the baton, start of a new era, public recognition of change. Family businesses need to do likewise. 


At times there is no official handover and the organisation is left to decipher if and when succession has occurred, even as a successor takes the role. This is because the senior generation member usually stays on, often in the same physical space, but more important, they seem to still operate in the old job. 


While it is not necessary for the previous CEO to take a helicopter ride away to his new office like the pope emeritus did, family businesses are well advised to make the transition public and real. This is not to say that there is a total break from the past. 


When Pope Francis I was installed, he wore the same pallium of his predecessor, but the ring of each pope is destroyed and a new one created for the successor. The signals and symbolism are so poignant and relevant. 


Succession in family business signals some continuity, notably of values and, at the same time, new ways of governing. The successor must put his unique stamp on the organisation. 


Pope Francis I offered his first prayer as Pontiff for his predecessor; a wonderful public acknowledgment that family business successors will do well to follow. 


The two leaders have spoken on the phone and met since the inauguration. For businesses, this consultation is critical and there are various consultative and ambassadorial roles that the previous CEO can adopt. And there is only one pope.


Stewardship and delegation 


In his inaugural homily, Pope Francis I defined the mission of the church as taking care of everybody. He used the words protect, protection and protector a combined total of 33 times in an address of 1,432 words and spoke of his role to “protect all of God's people.” He urged followers to protect the poor, disadvantaged and creation itself. Family business leaders are stewards of a family’s legacy and wealth. They secure the assets for the next generation. One of their roles is protection: of their employees, the business, the family and even the socioeconomic environment in which they function. 


Pope Francis I spoke of authentic power being service. It is a lesson that I urge all existing and upcoming family business leaders to heed. 


Leaders can succeed in retaining real authority by giving up power. For the sake of time and order, it had been announced that Pope Francis would not hand out communion, yet he saw fit to distribute the eucharist to a select few. Delegation is important as is keeping in touch through regularised and established channels. 


The installation of a new pope carries ramifications for a long standing global institution, where membership is based on faith. Cardinals speak of their reliance of the influence of the Holy Spirit in their deliberations and ballots. Family business succession does not require divine intervention, although at times it surely seems that way.


Dr Annette Rahael is a family business adviser.


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