As the owner of the Yankees, Steinbrenner owns something as valuable as land to give to his children, if not more so. As he comes close to retirement, Steinbrenner has grappled with the question of succession for years: who will own and run the Yankee dynasty after he retires? It’s a major decision, even from the angle of dollars and cents. According to Forbes magazine in September 2007, the Yankee franchise is worth $1.3 billion.
Fortunately for Steinbrenner, there seems to be several worthy candidates for his position, including those he groomed himself, his sons Henry (Hank) and Harold (Hal), who have handled most of the day-to-day responsibilities of running the team since 2005. Hank is currently the Yankees Senior Vice-President while Hal is Executive Vice President, Treasurer, and a General Partner. The brothers work closely with the other Yankees top brass, namely, team president Randy Levine and General Manager Brian Castman.
These four men are viewed as the front-runners in replacing Steinbrenner as Yankees' head honcho when he retires. And if the picture wasn't crowded enough, another face was also in the running until end-March 2008, Steinbrenner's former son-in-law Steve Swindal. But that's no longer the case, according to The Economist, which reported on March 31 that Jennifer, Steinbrenner's daughter, would soon be divorcing Swindal, a move that experts feel puts him out of the running for the Yankees top post.
While Steinbrenner has not revealed who will eventually succeed him, one thing is sure: like the savvy baseball executive that Steinbrenner is known to be, he has all his bases covered as far as succession is concerned. Steinbrenner has lined up a host of worthy successors both from his own family and from outside of it to ensure that the Yankees are in good hands after he has gone.
If you’re currently holding the reins of a family business, how well have you prepared for the day when you eventually retire? Like Steinbrenner, have you groomed a host of worthy candidates for your post? Or are you dead-set on naming your eldest son or a member of your immediate family in your place?
It does not matter whether you own a billion-dollar organization like the Yankees or a small Mom and Pop corner store. If you want your business to prosper when you step down, the matter of succession must be addressed.
Last September, the New York Times reported that there was no difference between a family-run company and a typical company in terms of several key performance measures. The Times cited a study by the London School of Economics that covered 700 manufacturing companies in the USA, UK, Germany and France. However, the Times did take note of two important findings when it came to the bottom line: the study showed that “family companies run by an outside professional C.E.O. performed on average 12 percent better than the average family business” and that “companies run by the eldest son underperformed the average by 10 percent.”
Analysts said that one reason for this disparity is that oldest sons know that they will eventually inherit the company and do not work as hard as someone else who is competing for the post. When it comes to passing on your business to your son, there's the rub.
This is where the wisdom of Steinbrenner's approach to succession comes in.
Steinbrenner has not revealed whether one of his sons will eventually run the company. Chances are, he has told them that they will succeed him, but only if they can prove themselves to be capable of running the business. Hence, while he has groomed his sons to run the company, they have been thrown into the same ring with other worthy competitors. The competition makes them work as hard as anyone else.
On one hand, company founders have worked so hard to make their firms succeed and deserve to give the company reins to their children as their legacy and to ensure their future. But on the other hand, the founder’s hard work may go for naught if his child is not prepared to run the business. In the final analysis, there is nothing that compares to grooming one’s children to be the best possible candidate to take your place.
In closing, there are five questions to consider before deciding to award control of your business to one of your heirs:
1. Does the candidate have a track record of success in his past jobs and projects?
2. Has the candidate's educational background prepared him for this leadership role?
3. Has the candidate proven that he can succeed outside the family business?
4. Is the candidate aware of his deficiencies and willing to do something about them?
5. Does the candidate's demeanor and behavior put to rest any questions about nepotism?
If your chosen heir passes these tests with flying colors, then you can rest assured that he’s ready to take over the family business.
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