Family businesses letting go

I’ve developed the concepts of “control from the grave” and the “ghost on the wall” in family businesses in my two earlier blogs.

In this final blog, I want to look at a case where this control takes the form of letting go. This is about new leaders being able to make decisions and take actions the previous generation may not have been able to.

To illustrate this, I’d like to use the example of the Johnson family. John Johnson and his wife Eunice founded Johnson Publishing in 1942 to bring to market Ebony and Jet, among the first magazines targeted at African-Americans.

The Johnsons’ magazines and later offerings, including cosmetics and travel products, were hugely successful. Their success extended the family’s influence across business, social and political spheres.

Linda, the Johnsons’ daughter, gained knowledge of the business from an early age and joined the firm after completing her MBA.

John knew Linda was the right person to succeed him. But he also recognized that he was seen as a dominant leader and worried that employees – many of whom had been with the company for decades and knew Linda from birth – would treat her as less of an authority in his absence.

So, as John’s retirement grew near in the late 1990s, he made it abundantly clear to all employees that Linda was to be their new leader. But he also made it clear that Linda would make her own decisions, and any employees’ appeals to him would not influence her choices.

In this way, John put into place control from the grave measures not to preserve his own authority, but to ensure that his daughter could establish effective control. We can see this as an example of controlling the people, but not controlling the leader.

In fact, one of Linda’s biggest tests as a new leader was the modernization of the company’s subscriptions department, which meant staff layoffs, including redundancies for many employees who’d served for decades.

When she discussed this sensitive issue with her father just before his death in 2005, he said, “I can’t let those people go. I could never do that.” Note that he didn’t say, “We can’t do that.”

That subtle distinction gave Linda implicit permission to do what her father couldn’t – and freed her to protect the business’s interests. She led the unavoidable layoffs with grace and dignity.

She was guided by a “loyalty test”: the idea that loyalty to the wrong people – no matter how tempting it may be – is disloyalty to the right people.

Linda went on to make many other key decisions, such as the hiring of friends Desiree Rogers and Cheryl Mayberry McKissack, who brought much-needed complementary skills as CEO and COO respectively to Johnson Publishing.

The Johnsons’ story is a more positive instance of overt control from the grave. In this case, the founder used his considerable authority and control to do two important things:

  • Ensure that staff would respect the authority and will of the incoming leader
  • Provide the successor permission to do the right thing for the company, even if it was something the founder himself couldn’t do

So control from the grave is not inherently a bad thing. What matters most is that the outgoing and incoming generations wield such control in a way that’s truly in the business’s best interests, not just their own.

Lloyd Shefsky, Clinical Professor of Family Enterprises, Kellogg School of Management

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s