nepotism is no longer an option
As appeared in the Financial Post (see article).
By Jamie Sturgeon
As Andrew Oland sits back with his family tomorrow and basks in the adulation that fathers have earned over the year, his job running the family business, Moosehead Breweries Ltd., will be far from his mind.
"I think the nice thing about my family life over the last couple of years has been the clear separation of business and family," he says. "Father talks to me about business at work," he says, referring to chairman and owner, Derek Oland. "I never have to worry about going over there for Sunday dinner or something and hearing, 'Geez, your numbers were crappy last week,' which can create a lot of issues. You could imagine how my spouse might feel if every family engagement was a Moosehead board meeting."
Andrew, 40, became the president of the New Brunswick brewery in April, the sixth generation to take the helm of the company that Susannah Oland started in Halifax in 1867.
Despite ups and downs in the fortunes of the 140-year-old business, including its near-obliteration in the 1917 Halifax explosion, the company has steadily grown under the family's direction into a popular national brand.
Yet, in the pantheon of great Canadian family businesses, Moosehead is a rarity. The incompetence and infighting that has undone so many prosperous companies once the patriarch is no longer in control has missed Moosehead.
Smarts and a passion for the beer business -- not nepotism-- have pushed Mr. Oland, a Harvard MBA graduate who started out as a foreman in the bottle shop, to the top of his family firm.
"If people feel that a family member is going to come right in, it makes it difficult to attract and retain top-quality management," Mr. Oland says.
The story of the Olands stands in stark contrast to some of the most prominent family firms in Canada that have disappeared because of bad leadership or family squabbling.
The Eatons are one example. The grocery fortunes of the Steinberg and Wolfe families have also been lost to either ineptitude or infighting, according to Diane Francis, author of Who Owns Canada Now, and editor-at-large at the Financial Post.
"In today's Darwinian global economy, incompetence or well-meaning but inadequate owners cannot be foisted on an organization without imperilling its existence," Ms. Francis writes.
In short, nepotism is no longer an option. Ask the Eatons.
The 130-year-old retailer controlled by the family laboured under a bloated management run by less-than-focused heirs through the final decade of the company's existence, according to Joseph Martin, director of Canadian business history at the Rotman School of Management.
"Top management got pretty lax, and this went on for years and years," Mr. Martin says. "When Simpsons and Sears came in, [Eaton's] missed the move to the suburbs, they missed offering their own credit cards. There were many things they missed."
Eaton's finally succumbed in August, 1999, and the remaining heirs, John Craig, Fredrik, Thor and George, watched as their $190-million stake in the department store chain withered away as it was acquired by Sears.
"The fact is that business aptitude is not genetic," Ms. Francis writes.
Even when the baton is passed to capable hands, ferocious feuding between rival offspring can kill the family firm. "Sisters and brothers sometimes brawl to the point of estrangement, as in the case of the Steinbergs and Wolfes, who had to sell their companies following internal disagreements about which sibling, or sibling's husband, would be CEO," Ms. Francis writes.
Bad blood now threatens to disassemble the vast empire of the Irving family, a $6-billion conglomerate that spans forestry, real estate, media, transportation and media holdings. The 126-year-old family business founded by J. D. Irving in New Brunswick, will be divvied up among the three grandsons -- J. K., Arthur and Jack -- all in their seventies, and their heirs. It will surely survive, but not as a family-run business, according to Ms. Francis. "The task will be to divide the spoils, and for those who want to run parts of the empire to buy out those who do not."
Of the 75 most successful Canadian businesses or partnerships of the last 20 years featured in Ms. Francis's book, only 13 have made their heirs CEO.
"I think these companies have learned the lessons of the past," Mr. Martin says. "The crucial thing is if can you make the transition from the family ownership to sophisticated managers."
Turning over the company, or a good portion of the decision-making, to hired executives if the family candidate doesn't make the grade is a common recourse.
The next big patriarchal company facing a changing of the guard is Rogers Telecommunications Inc. Ted Rogers just celebrated his 75th birthday, but his succession plan remains a mystery to outsiders. His son, Edward, and daughter, Melinda, both hold senior positions within the family-controlled company, and both are reportedly in the running.
"I know managers who have worked with both of them, and they say they're very competent and very hard-working. I'd say they've learned from their father," says Toronto analyst Eamon Hoey.
Yet Mr. Hoey says there are other senior executives in place who could take the reins once Mr. Rogers is gone.
"I think Ted is a very pragmatic individual," Mr. Hoey says. "The reality is that over the last three or four years there has been a slow succession plan being executed, from my perspective, and it's one that's putting professional managers in charge."
Back at Moosehead, the feeling is mutual.
"A point my father has always made, and I agree strongly, is that we can be owners, but we don't have to be managers," Mr. Oland says. "The family can still own the business."
