Tag Archives: CEO

Scared of hiring non-family executives?

Try inexperienced and under-performing family members that you cannot suspend or terminate by reason of birthright.

As a father, you probably hired or even cajoled a reluctant family member to join the business by virtue of his last name and nothing else. Credentials and work experience were never part of any yardstick. Employed family members skipped any formal hiring process. In short, the next gen employment is typically outside the scope of the HR department.

Entrepreneurial parents, usually the father, would routinely blurt a line to the children:  “Work hard and help me run the family business so that when I retire in a few years, you and your siblings will eventually take over.”

That’s it. No rules, just a simple crossover from the family to the business system. So when conflict happens, the dispassionate children, predictably manifesting entitlement will end up being rewarded with the 4 P’s –– higher Pay, Promotion, more Perks and Potential windfall (ownership). The consequences of rewarding bad behavior can cause irreparable damage.

One thing is certain though, the end result will undermine the years of adversity and hardships parents spent growing their wealth.

Without very clear and enforceable rules related to business and ownership governance, the business will naturally tilt towards failure. When an internal event like the sudden death and illness of the senior leader happens or an external circumstance like a crisis occurs, the business will end up in jeopardy.

To quote Jaime Augusto Zobel De Ayala, the 8th generation successor of the 184-year old Ayala Group from the Philippines,

“I often remember my uncle Joe’s comment that it was statistically impossible to produce enough highly qualified family members to run the businesses generation after generation. We only have two family members (out of 7 siblings) in the business at this time. My brother and I serve as chairman and president at the holding company and we provide leadership on the boards of the companies within the group. We are involved in the selection of CEO’s and CFO’s, succession, strategic partners and board members. We also participate in major strategic and resource allocation decisions and provide defined leadership through the governance structures of the boards,”

Akin to the spectacular growth of the Ayala Group the past 30 years, the success and growth of an enterprise depends on its ability to attract, motivate, develop and retain outstanding executives who are not kin.  Any business with the intention to continue and grow needs executives with a profile matching the business culture, organization, and strategy (Gallo, 1991; Welch, 2005).

In my nine years of governance work in Asia, I have come across senior generation leaders making critical decisions related to succession planning. Steadily gaining traction is the preference of business owners to fully hand over management responsibility to qualified, non-family executives. The rationale, objectives and advantages are many fold:

  1. They are hired based on talent, industry experience and the value that they can contribute to the organization
  2. They are metric driven and their KPI’s (Key Performance Indicators) are measureable
  3. Their compensation is commensurate to their skills
  4. They are geared to perform on a Quarter to Quarter basis
  5. They look forward to pre agreed incentives and profit sharing arrangements
  6. They are also prepared to resign and assume accountability should they perform below expectations
  7. The engagement is on a professional level and they are driven primarily based on business profitability
  8. They have an employment contract that is contingent on performance
  9. Owners look at their employment as an investment rather than a cost driver
  10. Emotion is irrelevant
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The youngest self-made billionaire at 25

SOME of the richest, most successful entrepreneurs take decades to accumulate their fortunes. But others strike gold very early on.

It’s never been easy to get rich so young. Some of the wealthiest in our midst took almost a lifetime to amass wealth. Surprisingly, in a Forbes article penned by Kate Vinton, a record 66 members of the 2016 FORBES Billionaires List are under the age of 40, more than triple the number four years ago and a seven-fold increase since 2010. They are among 30 billionaires under 40. More notable is the fact that the majority of these youthful billionaires have created their own fortunes through innovation and imagination with a hefty dose of some good luck.

Of the 36 who made their own way, more than three-quarters got rich in the tech sector, including 25 billionaires whose fortunes come from unicorn startups valued at more than $1 billion.

The youngest of these self-made tech mavens is 26-year-old Snapchat co-founder Evan Spiegel (born June 4, 1990) who first appeared on the Billionaires List last year with a net worth of $1.5 billion.

According to Wikipedia, Evan was born in Los Angeles, California, the son of Melissa Ann Thomas and John W. Spiegel, who are lawyers. Spiegel grew up in Pacific Palisades, California. He was educated at the Crossroads School for Arts and Sciences in Santa Monica, and attended Stanford University.

In 2012, Evan left Stanford to focus on Snapchat shortly before completing his degree. While studying product design at Stanford, he proposed “Snapchat” as a class project. Spiegel co-founded the mobile application Snapchat along with Robert Murphy and Reggie Brown. He is the CEO of Snapchat.

The app — which, in the place of archived, chronicled posts a la Facebook, allows users to send messages that disappear shortly after being opened — has come to heavily influence, if not define, the way young people communicate, making it integral to brands, advertisers and anyone else looking to capture the attention of millennials and Gen Z-ers.

Like many tech startups from near the Silicon Valley area, Snapchat has its roots in a bunch of college kids.

In an Entrepreneur Magazine article written by Laura Entis, if Spiegel is quick to acknowledge the privilege of being born with a silver spoon in his mouth, he’s also quick to point out that privilege isn’t everything. To truly succeed, one must capitalize on it. “It’s not about working harder; it’s about working the system,” he said.

At Stanford, he did just that, aggressively networking in order to meet influential people, including Google executive chairman Eric Schmidt and Intuit co-founder and chairman of the executive committee Scott Cook, who set him up with a job at the tech company while he was still a student.

A university dropout

In 2012, Evan dropped out of Stanford and his course in product design, joining the same club as Bill Gates, Mark Zuckerberg and Steve Jobs. Despite being a frat house favorite, he failed to graduate, quitting college just a few credits short of earning his degree.

His first app was a flop

Digital Spy online also reported that prior to releasing his money maker, the entrepreneur launched “Picaboo”, a photo-sharing app that deleted images within 10 seconds of them being viewed by their recipient. Sounds familiar, right? Picaboo was a flop, failing to gain traction before being canned and rebranded as Snapchat. The rest, as they say, is history, more than 200 million users later.

He turned down $3 billion

Back in late 2013, Evan Spiegel turned down a huge sum of money from social giant Facebook.

With Zuckerberg’s team willing to front up $3 billion to acquire Snapchat, Spiegel reportedly gave them the runaround before turning down the sizeable bid. Instead of coveting instant riches, the Snapchat man admirably opted to pursue the dream of building a successful business.

“There are very few people in the world who get to build a business like this,” he told Forbes at the time. “I think trading that for some short-term gain isn’t very interesting.”

Industries to watch in the Year of the Red Fire Monkey

AS A recap of what I wrote last week, those born in the years of the Sheep and Monkey would be financially blessed this year. Maritess Allen, the feng shui master, goes on to say, “The number 8 (wealth star) flies to the southwest this year. This is the corner of the Sheep and the Monkey, so they will enjoy the benefits of the wealth star throughout the year. Other lucky signs of the year include the Rabbit (prosperity), the Dragon and Snake (victory, luck), Horse (windfall), and Rooster (romance, luck).

Unlucky Signs

Not so lucky are those born in the years of the Dog and Boar, who will have to deal with a lot of arguments because of the conflict star. Likewise, those born in the Year of the Rat will have to contend with the Robbery Star. Most unlucky are those born in the Year of the Tiger and the Ox, who will have to deal with the misfortune star. Those born in the Year of the Horse will also contend with the three killings star in the south.

“The Tiger will have to be especially careful because in addition to being the enemy of the Monkey, it has to contend with the misfortune star,” the feng shui master says. All of us have to look after our health, though, as the illness star flies to the center of the chart.

“The year is hot, with three fire elements. There are also three metal elements, one wood and one earth. What is missing is water,” Allen says.

Property sector

Transformation, expansion and opportunities come in 2016 for the real estate industry but the market will see a very competitive landscape, as the number of developments rise and customers become more discerning.

Based on the forecast of geomancer Paul Ng, businesses involving water, metal or earth would be favorable and prosperous this year because they are in harmony with the fire element. This prediction is also supported by feng shui expert Joey Yap. According to him, since fire is dominant and fire creates earth, the general outlook is still positive despite the economic slowdown in other neighboring countries. Certified master feng shui consultant Joyce M. Co of World of Feng Shui-Malaysia says that with 2016 being a fire year, there is inevitably a lack of water supply in the elements. Surrounding ourselves with water and its different forms will help bring balance. “In the cycle of elements, fire creates earth and earth has always been related to the real estate industry. As we enter the year, there is a lot of growth, expansion and opportunities that can be seen in this sector.”

The country’s growing demand from office rental, rising rents, construction boom and steady OFW remittances play an important part as well in driving the property sector’s growth.

Personally, I look at the property sector differently. The industry has matured. It has had record extended runs and the softening in the vertical segment is inevitable. All other segments and asset classes will continue to exhibit fairly reasonable growth.

Women Power

The absence of water does not bode well for those in positions of authority like CEOs, heads of state and heads of the family.

“Water symbolizes authority. This means, because there is an absence of water in the charts, the authority of the patriarch is weakened. What’s more, since the conflict or argument Star flies to the northwest (the corner of the patriarchs) this year, they will be disgruntled (masungit) and may have to deal with challenges to their authority.

On the other hand, things look great for the matriarch because of the auspicious stars that are in the southwest corner, which is the corner of the matriarch. Ladies will rule this year, so the men will have to be careful,” she said.

Good year for beauty industries

She says it will be a bullish year for the stock market, especially in the second half, while those in the beauty or personal development businesses will experience “great success.” Those in the metal industry, like pawnshops, will experience “fantastic” growth.

Those in the wood industries—retail, publishing, agriculture—not so much. A word of caution to suppliers…since 2016 is an election year, be sure to ask at least for down payments before you accept printing of flyers and brochures from politicians. If they lose, they may not be able to pay you anymore.