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WHEN THE FUTURE IS FAMILY
“I think, first of all, that you have to be very pragmatic,” says José Antonio Fernández Carbajal, the Chairman of beverage and retail giant FEMSA, speaking of managing a family-con- trolled business. Under Fernández’s leadership, the company, which is training its fifth generation of family leaders, has grown from a US$1.2 billion firm rooted in Mexico into a US$31 billion Latin American powerhouse. Making the tran- sition to a global corporation that still relies on family lead- ership involves adaptability, pragmatism, and an exemplary form of leadership.
Family members may be born into the business, or they may join a family-owned enterprise through marriage or other re- lationships. But Fernández cautions that being a member of the family is no substitute for
family but believes it was necessary for survival in today’s world. A company can have all of its assets invested in one country, he points out, or it can have its assets invested in 150 countries. This process diversifies risk and allows for faster growth.
“There comes a moment when the world opens, and you have to open to globalization,” Fernández advises. A company may find raw materials cheaper in the global marketplace, or it may discover that the local market is saturated. A strong leader must judge the business where it stands and judge its competitive place in the world, as well.
being an effective leader. A sur- vey of next-generation leaders from PwC emphasizes three key factors that help family execu- tives thrive: asking non-family managers for help, growing into new geographic markets, and diversifying into new lines of business. Fernández echoes all of these concerns when he talks about leading a successful fami- ly-controlled public company.
BRINGING IN THE
PROFESSIONALS
“You must be pragmatic about the decisions and trials surrounding the issue of family succession. In the next generation, there may be some family members who want to work in the company but cannot, while others have the ability to work in the company but don’t want to. It has to be a professional decision, just like in any other company.”
EMBRACING THE NEW
A family-controlled business should never hear its leader say, “I’m in love with my business. It was founded by my great-grandfather.” Adaptabili- ty and flexibility are paramount in order to stave off the paralysis that can grip such a business. Fernández warns that diversification and prod- uct changes are necessary to remain competitive. “You need the pragma- tism to say, ‘You know what? I was born a bicycle seller, but now I’m going to sell roller skates.’ This kind of pragmatism can be hard.” A fami- ly-controlled business must come to the realization that there are many valid options available, even though change may feel traumatic.
EXEMPLARY BEHAVIOR
In any family-controlled business, the rules for leadership must be clear, particularly when it comes to passing the baton. Preparation and communication are key, but perhaps the most important quality is a cer-
To ensure the long-term stabil-
ity of the company, a commit-
ment to professionalization is
essential. “You cannot make the
decision alone,” says Fernández.
“It has to be a professional deci-
sion.” He notes that companies
of all stripes, but particularly
family-controlled, publicly listed
businesses, must have talent-
ed, independent directors who “are going to say no to some things.”
tain humility. Fernández relates a key piece of advice he got when he joined the firm. His father-in-law informed him, “Do not think because you have a relationship with one of the ma- jor shareholders that you have some privilege here. You are only one more in a long line.” The older gentleman went on to add that Fernández’s only distinction would be to set the example for others.
Today at FEMSA, Fernández says that any major sharehold- er’s offspring can work in the company, but promotion past a certain level requires the approval of the Board of Directors’ Corporate Practices Committee, the equivalent of a Nomi- nating Committee. “For anyone of the next generation, their performance has to be approved by the Board. I tell them one thing—now, it’s your turn to set the example.”
Public reporting, especially through a listing on the stock market, offers family owners another reason to embrace the importance of professional governance. As Fernández puts it, “There is a dentist in Omaha who bought your shares, and he does not care or know where Monterrey is.” He just wants to know that company leaders are making wise, long-term de- cisions.
LEAVING HOME
Fernández oversaw his company’s exchange of the original family beer-brewing business for a share in a global giant. He describes the process as “painful and emotional” for the
INTERVIEW: FEMSA
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