BLOG BY JEREMY HAZLEHURST
On the face of it, nothing could be more unfair than a family business, in which the only way to get to the top is to have the right surname. But a piece of research recently carried out by three academics in America suggests that this unfairness is one of family businesses’ greatest strengths. And, paradoxically, that the specific type of unfairness in family businesses could even make them fairer overall.
Back in 2001 there was a fight to become the new chief executive of Pfizer. One candidate, Hank McKinnel, was known for his aggressive management style, while another front-runner, Karen Katen, was known to treat people respectfully, something which gained her friends in the company. McKinnel got the job, with one industry observer putting it down to his “toughness”.
In big corporations, lots of anecdotal evidence suggests that being nasty helps you get ahead. Recently a bunch of academics decided to test the theory, or as they put it, “should leaders be loved or feared” or, “can you have respect and power”?
They got hold of hundreds of corporate decision-makers and employees and stuck them in a lab, where they got “bosses” to deliver the same piece of news; one did it rudely, and one politely. The guinea pigs generally concluded that the rude manager was more “powerful” than the polite one.
The research concluded that corporate employees perceive that nasty people are more powerful than nice ones. Maybe they were reflecting their experience that a skill for accurately placing a blade between the shoulder blades is a prerequisite for getting to the top, but it’s not hard to see how this becomes a self-fulfilling prophecy. “Managers see respect and power as two mutually exclusive avenues to influence,” say the researchers.
You can’t be nice and get promoted. And that is unfair, because as the researchers said: “Numerous academic studies have shown that the most effective leaders are generally those who give employees a voice, treat them with dignity and consistency, and base decisions on accurate and complete information.” So the best people aren’t getting promoted. That’s not just unfair, it’s daft. (Hank McKinnel wasn’t a success as Pfizer’s CEO, incidentally.)
Perhaps the reason that this unfair situation exists in corporations is that the top people do not have a stable basis for their power. A bad quarter, and they could be forced out. They may well prevent the best people from challenging them, and so they could be tempted to prevent talented employees getting promoted. Only the nasty ones, who are less effective managers, will get on.
In family businesses, on the other hand, the basis of power is more stable. Top spots just aren’t up for grabs, no matter how much scheming, schmoozing and weaselling you do.
Without trying to paint an idyllic picture of family businesses, family members don’t feel threatened in quite the same way as corporate chief executives because they can’t be ousted by those lower down the chain. So they care and are able to promote people on the basis of their talent without worrying about their own jobs. In other words, they are free to be fair.