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Posting by: Geoff Brown
Date: July 8, 2009
There was big news in the hospitality industry last week when Marriott International announced that someone other than a Marriott family member, Arne Sorenson, would be taking over as President and Chief Operating Officer, putting him clearly in line to succeed Bill Marriott as the CEO. Bill and his father, J.W. Marriott, have been the only two CEOs the company has ever known.
Part of the reason given for this step toward non-family leadership is that none of Bill Marriott’s four children are considered ready, or even in a position to take over the company. The oldest Marriott offspring is nearly deaf and blind due to a rare illness, the youngest – 16 years younger than the first son – is simply not seasoned enough, and Bill’s only daughter is pursuing the more traditional Mormon life of raising family and serving on charities. Marriott’s second oldest son, John Marriott III, has been heavily involved in the business and was poised to be the next CEO by many observers, but he is notoriously introverted and uncomfortable in the spotlight. Tired of waiting for his opportunity, John went in another direction, but now serves as Vice Chairman of the Board of Directors at Marriott International. Even though it is a publicly-traded company the family still owns about 25% of the stock, worth close to $2 billion, and maintains effective control of the business.
This move promoting Sorenson was a huge change for how Marriott is run. They are suffering from the economic downturn and are in the midst of cutting costs and retooling parts of their business. Obviously Bill Marriott decided to put the good of the company first when deciding who should run the show. Bypassing the prepped son John begs the question of when is it appropriate to groom a non-family member for leadership of your family-owned and -run business. From a timing standpoint there is not necessarily a right or wrong answer. Whether it is the second, third or fourth generation depends upon many factors, but most importantly whether or not there are family members capable of running the business. All too often it is a given in a family business that the next generation will succeed into both ownership and operational control when that may not be the wisest decision.
The new heir apparent to the throne Sorenson was not just plucked from thin air – he has several years of experience at Marriott International, having first been introduced as a lawyer from an outside firm that worked on some cases with Marriott. Within a couple of years, Bill Marriott hired Sorenson, who eventually became their CFO. He has won over insiders and outsiders alike with his open, innovative style and very successful ideas for strategic planning. More importantly, he won over Bill Marriott early on, and although their ideas are different generationally, they share a similar value system.
Any family business owner(s) should consider whether their children are both interested and capable of running the business and provide them with the proper training and mentoring. The owners should also recognize that giving up the day-to-day control does not take the ownership and its related responsibilities away from the family. Those family business owners considering the succession of operational control should contemplate Bill Marriott’s decision for a few minutes and consider the virtues of looking outside the family. There is indeed some discomfort between John Marriott and Arne Sorenson, noticeably on John’s side, but publicly they are working at showing a united front. If the business fails while being led by the family, there will be nothing left to pass on. Sometimes you have to give it away to keep it.
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