Earning one's good fortune - pitting inheritance against merit in family business

Nation's Business, Jan, 1990 by Sharon Nelton

Earning One's Good Fortune

The questionable game of pitting inheritance against merit, deciding whether to sell the family firm, and a case study of a troubled family company. The matter of inheritance--of wealth, power, or leadership--becomes a fuzzy issue when it's set in the context of a family business. I bristle when people make a point of noting that newspaper publisher Katharine Graham succeeded her husband, as if to suggest she has no merit of her own.

For example, the authors of Corporate Bloodlines, a new book on family business, write: "It is still rare to find women at the very top of America's biggest corporations and family businesses. Katharine Graham, publisher of The Washington Post, may be the most visible example. But she inherited her post upon her husband's death."

And when he spoke at a meeting in Washington last fall, Allen H. Neuharth, former chairman of the Gannett newspaper and broadcasting company, claimed credit for naming the first five women publishers in the U.S., "except for a Katharine Graham or somebody who inherited from their daddy."

Silently I snap back: Folks wouldn't denigrate J. Willard Marriott Jr. by saying "but he inherited his post."

But now, I find, they would. In reprinting the Forbes magazine listing of the country's 400 richest people recently, USA Today said that Marriott's fortune and those of his mother, Alice Sheets Marriott, and of his brother, Richard, are inherited. I could not find such a designation in the actual magazine listing, although Forbes said that 40 percent of the fortunes were inheritances and gleefully referred to those with a "genetic passport" to wealth.

I don't know how these distinctions are made--neither Leonard nor Ronald Lauder appeared in USA Today as having inherited the $500 million listed next to the names of each, but surely their wealth comes from Estee Lauder Inc.

The game of pitting inheritance against merit is questionable at best. Allie Marriott was her husband's partner in starting the family business with its first Hot Shoppe back in 1927, and she is still vice president and a director. Didn't she earn the family fortune, just as J. Willard Marriott Sr. did?

After rigorous preparation, young Bill was elected president at a meeting of stockholders in 1964, when Marriott Corp. was approaching annual sales of $90 million. Now annual revenues are $7.3 billion. Didn't Bill Jr., now chairman, earn his fortune and his right to lead? Surely the Marriott family, not just one man, built the Marriott wealth.

Katharine Graham certainly merited the right to lead, building a media empire that now takes in $1.4 billion a year. So why demean her by saying "but she inherited her post"? (For that matter, her husband "inherited" the position before her, from her father.)

We seem to value founders more than successors and men more than women in our family businesses. What we need to remember is that, whether they are men or women, successors are just as important as founders if a business is to endure. Sometimes they are greater builders than their predecessors. Those who are most committed view themselves as stewards, not merely of family wealth but of jobs, with responsibilities not just to the family but also to the world in which they live.

So let's think twice before we say someone "inherited" a position or a fortune. He--or she--may really have earned it.

Sharon Nelton, Nation's Business special correspondent, writes about family firms.