Perils of non-family managers

February 25, 2010
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Automotive News posted an unusual story (registration required) yesterday quoting the former head of Toyota’s U.S. operations as saying the company had been taken over by “anti-family, financially oriented pirates,” and that the only person who can save the company is family scion Akio Toyoda.

Jim Press, who left in 2007 after 36 years with Toyota, told the Detroit publication that the company didn’t want him talking about its problems, but that he “can’t stand it anymore and someone has to tell it like it is.”

Toyoda, the grandson of Toyota founder Kiichiro Toyoda, took the reins as CEO last summer as the company suffered sales declines and escalating quality problems.

Press, who later became president of Chrysler LLC, didn’t disclose names of the people he believes undermined Toyota’s corporate culture over the past decade, but emphasized Akio Toyoda embodied the values that made the company a global manufacturing powerhouse.

Speaking of non-family executives, Press said, “They didn’t have the character necessary to maintain a customer-first focus.”

Press’ comments will sound familiar to people who stick with some family-owned companies after an acquisition or new management arrives. In other cases, new blood shakes up staid cultures; employees don’t recognize it at first, but new managers save what would have been a sinking ship. Outsiders also can bring professionalism and stamp out family dysfunction.

The Indianapolis area has seen a number of family-controlled businesses taken over in the past few years. Here are just a few examples:

— Marsh Supermarkets, which was publicly traded but controlled by the Marsh family, was acquired in 2006 by Sun Capital Partners.

— First Indiana Bank was sold in 2008 to Marshall & Ilsley, ending a long run by the McKinney family.

— Speaking of banks, and going back a decade, Peoples Bank was bought by Fifth Third Bancorp, ending an era of McWhirter oversight.

— Norm Vogel & Sons, a household appliance dealer on the east side, was acquired in 2006 by locally based Clark Appliance.

— Going back decades, the Lilly family hasn’t run the pharmaceutical company in a long time.

That’s a small list. You’ll think of other companies.

What’s your opinion of how these outfits have been handled? Are they better off or in worse shape now that they’re in new hands?

What about the larger question of family ownership? Would you rather be part of an organization run by a family, or not?
 

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