Dan Edelman, a giant character and patriarch of the PR world, founder of Edelman Public Relations died yesterday. He and his family - especially his son Richard who took over as CEO in 1996, grew the company to the global size and scale it is today. Founded in 1952, it now operates in 66 countries employing over 4500 people with revenues of $637m. Although regularly courted by potential suitors and buyers, they remain fiercely independent. Dan stayed involved in the company right to the end of his life; the legacy he left behind is kept alive not just by the family, it is also embedded in the institutional memory of the firm. No Edelman employee, however junior, would not know the history and the journey the firm has travelled in its 60-year history.
I have long been fascinated by family firms, since observing the difference between the seven years I worked for Edelman running its UK operations and the seven years before that, when I worked for a publicly owned corporation.
Like it or not, there is never any doubt as to who makes the final decisions in a family-run business - but decisions are made quickly, simply, cleanly. Whatever frustrates you when working for a family firm, it's very rarely because decision-making is slow and cumbersome. Working for a family business means you do become part of an extended family although you should never forget that you will never actually be part of the family. For many entrepreneurially minded people this is as good as it gets. The most passionately committed colleagues I have ever worked with were Edelman colleagues. The longest lasting friendships - until today - I've had with ex colleagues are with Edelman people from all over the world. We had loud and fierce arguments with each other and with our owners but we were always supportive of each other and proud of our company. Yes, our owners would almost always win but we had what many of our counterparts in publicly owned corporations don't have, a louder voice. Shorter decision-making helped motivate businesses, and the almost obsessive wish always to be the first with new ideas meant that creativity and innovation flourished. Running an Edelman business felt like running our own business. Achieving this sense of ownership from a leadership team is of course, the Holy Grail for any organisation.
There were downsides. Relationship management becomes very personal, not unlike a large group of siblings. Getting the attention of the owner becomes even more important than making sure a 'normal' CEO knows when you'd done something clever. Conversely, being and staying in your owner's good books is a must. There is no court of appeal for those who were 'out'. Often, as a family business expands globally, taking on other national cultures is tougher at the early stages - absorbing the family culture is not always easy when you're translating a corporate culture across continents.
So what of the results?
PWC's Family Business Survey 2012 found that family businesses are thriving globally - 65% of family businesses have grown sales in 2011 compared with less than half in 2010. They're also much more ambitious and confident about their prospects. PWC summarised family business characteristics as having longer term thinking and broader perspectives, quicker and more flexible decision-making, an entrepreneurial mindset, greater commitment to jobs and the community and a more personal approach to business based on trust.
In the Gulf region, more that 80% of businesses are either family-run or controlled by families. Family Enterprise USA a year ago placed family businesses in the USA as employing 63% of the workforce and generating 57% of GDP. Its CEO Ann Kincade said: "Beyond the profit motive, they are focused on legacy-creation and community enhancement..... Family businesses have leadership tenure for or five times longer than their non-family counterparts and carry much greater equity as they plan to responsibly invest in growing the company".
There is much that publicly owned corporations, who in today's disastrous economy are suffering from falls in sales, margins and confidence, can learn from family businesses. Can they replicate the model of a family business without a family driving the business? Can they instil a sense of passion and ownership among senior managers beyond their remuneration and bonuses? A lot can be done in shortening decision-making, in encouraging the passion (not just the culture) of innovation, in giving employees and managers a bigger voice, in thinking longer term, in managing rewards that will work towards achieving the success of family businesses.
But most of all, it's the staying power of running a business which is as much about its legacy as it is about early returns for shareholders that makes the biggest difference. And this is arguably, the toughest call.
I have long been fascinated by family firms, since observing the difference between the seven years I worked for Edelman running its UK operations and the seven years before that, when I worked for a publicly owned corporation.
Like it or not, there is never any doubt as to who makes the final decisions in a family-run business - but decisions are made quickly, simply, cleanly. Whatever frustrates you when working for a family firm, it's very rarely because decision-making is slow and cumbersome. Working for a family business means you do become part of an extended family although you should never forget that you will never actually be part of the family. For many entrepreneurially minded people this is as good as it gets. The most passionately committed colleagues I have ever worked with were Edelman colleagues. The longest lasting friendships - until today - I've had with ex colleagues are with Edelman people from all over the world. We had loud and fierce arguments with each other and with our owners but we were always supportive of each other and proud of our company. Yes, our owners would almost always win but we had what many of our counterparts in publicly owned corporations don't have, a louder voice. Shorter decision-making helped motivate businesses, and the almost obsessive wish always to be the first with new ideas meant that creativity and innovation flourished. Running an Edelman business felt like running our own business. Achieving this sense of ownership from a leadership team is of course, the Holy Grail for any organisation.
There were downsides. Relationship management becomes very personal, not unlike a large group of siblings. Getting the attention of the owner becomes even more important than making sure a 'normal' CEO knows when you'd done something clever. Conversely, being and staying in your owner's good books is a must. There is no court of appeal for those who were 'out'. Often, as a family business expands globally, taking on other national cultures is tougher at the early stages - absorbing the family culture is not always easy when you're translating a corporate culture across continents.
So what of the results?
PWC's Family Business Survey 2012 found that family businesses are thriving globally - 65% of family businesses have grown sales in 2011 compared with less than half in 2010. They're also much more ambitious and confident about their prospects. PWC summarised family business characteristics as having longer term thinking and broader perspectives, quicker and more flexible decision-making, an entrepreneurial mindset, greater commitment to jobs and the community and a more personal approach to business based on trust.
There is much that publicly owned corporations, who in today's disastrous economy are suffering from falls in sales, margins and confidence, can learn from family businesses. Can they replicate the model of a family business without a family driving the business? Can they instil a sense of passion and ownership among senior managers beyond their remuneration and bonuses? A lot can be done in shortening decision-making, in encouraging the passion (not just the culture) of innovation, in giving employees and managers a bigger voice, in thinking longer term, in managing rewards that will work towards achieving the success of family businesses.
But most of all, it's the staying power of running a business which is as much about its legacy as it is about early returns for shareholders that makes the biggest difference. And this is arguably, the toughest call.
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