Nepotism

IN PRAISE OF NEPOTISM
An Interview with Adam Bellow

Adam Bellow is the author of a remarkable book, In Praise of Nepotism: A Natural History, which in our opinion is a must-read for anyone in a family business. Or maybe we should just say it is a must-read, family business or not. He's also editor-at-large for Doubleday and former director of the Free Press.

Yes, he's the son of the renowned novelist, Saul Bellow, but you can trust us when we say he's a danged good writer in his own right. For 20 years as an editor, Adam Bellow helped others develop their (often controversial) books before he authored Nepotism. As you would expect, the son of Saul received a great deal of media attention and more than a few reviews - some critical but most praising his effort. "What I've learned is that the reaction and criticism is often as interesting as the book," he laughs. We don't agree in this case, especially after reading the reviews. This is a very interesting book!

Curious to know the man and more about the book In Praise of Nepotism : A Natural History, we tracked him down for an interview and found him to be engaging, thoughtful and hardly the spoiled brat his critics would have him be. We wanted to know more about his motivations for writing the book as well as how the subject might have particular relevance to families in business. His answers were as enlightening for us as we suspect they will be for you.



FBE: Tell us what influence your father had on your choice of vocation?

BELLOW: I didn't grow up with my father because my parents divorced when I was two. So he served more as a model than someone who was hands-on and personally involved in my learning to write. He did have a powerful influence on me, and I was clearly drawn in his direction at an early age.

He had nothing to do with my getting into publishing, however... at least, not directly. That was more of an accident after I ran out of other options. I was thirty and just married and went to see a friend of my father for advice. He directed me to Erwin Glikes, publisher of The Free Press, who hired me as an editor. Over the course of my career I have not benefited at all as the son of Saul Bellow, even though my entry was definitely facilitated by the connection. I'm a good example of what I refer to in my book as the "new nepotism."

FBE: What does that mean?

BELLOW: New nepotism is not the same kind of nepotism that people generally think of. It's not the same as we have defined in years gone by. There are important differences. With the new nepotism, parents no longer pick up the phone and pull strings. Instead, it's the children themselves who decide this on their own and they find their own way to exploit those connections.

Rob Reiner is a good example. He's one of the most respected and talented people in Hollywood. But his father Carl was famous before him and Rob grew up in that milieu. His father's friends were Mel Brooks and Norman Lear, who would come to the Reiner house for dinner. So Rob grew up in this world and it was clear that he wanted to be like his dad, but his father never lifted a finger to help him. He didn't have to. Rob was cast by Lear in "All in the Family" and has gone on to great success. Nobody uses the term nepotism for Rob. But you do hear that when people talk about Tori Spelling, daughter of Aaron Spelling. She wasn't a very good actor and never achieved much after she was cast in her first role.

On the other hand, Sofia Coppola was cast by her father and therefore tarred with this (nepotism) brush, but to her credit she became serious as a director. She eventually put out some modest and well-crafted movies and received praise from the critics. Now she has a movie that's wildly praised and won an Oscar for best screenplay. So she wiped out the stain on her past in the only way possible, by buckling down and putting herself through an exhaustive apprenticeship. Of course, when she accepted her Award the first thing she did was thank her father, who is a wonderful teacher. The Coppola's operate on the old system, and they really are like the Corleone family. But they are also very talented.

FBE: Your book received a few harsh criticisms, probably because you "praise" nepotism even though you're the son of a famous author.

BELLOW:I've been a professional book editor for almost 20 years, and as it happens I've published a number of controversial books that cut against the grain of majority opinion and sentiment. I got a reputation in the 90's for doing this, so I've had an opportunity to observe how challenging ideas are received. My book is radical in the strict sense of looking at a phenomenon from the roots. Most people don't examine the roots of their own ideas and float along on the surface of popular opinion. When you challenge people to rethink their basic assumptions, it's literally painful and people react defensively. I've seen this before but never experienced it directly.

FBE: So you tackled a subject that had yet to come under much scrutiny.

BELLOW: No one before me took it seriously as a social issue, and I was surprised and delighted that no book had been written before.

FBE: It seems you may have hit a nerve with some of your readers.

BELLOW: Nepotism is a fault-line issue, especially in America where our practices are at variance with our principles. That's why we want it left alone. People don't want to acknowledge how much nepotism plays a role in their own lives. We want to think of ourselves as self-made men and women. People in other parts of the world don't understand that. They ask why Americans put parents in old folks homes and children move thousands of miles away and allow our families to fall apart.

FBE: How does that relate to your concept of new nepotism?

BELLOW: What we're experiencing is a swing of the pendulum away from radical individualism and back to the family. For the last several decades we've focused on the entrepreneur as the ideal businessman. He's a Lone Ranger figure, with maybe a loyal Tonto at his side, but certainly no relatives. He hacks out a homestead, fights off the Indians. He's independent in the image of John Wayne. That's the ideal, but it's not really the American way, which is in actuality the family business tradition. You see it in the Westerns, where so many of the ranchers were Irish immigrants and very family oriented.

FBE: Like Pa and his sons on Bonanza?

BELLOW: Exactly. I have a section in my book on the West. All the criminals - the James' Gang, for example - were part of criminal families. Law enforcement was also family-based. If you were sheriff, you hired your brother as deputy, like Wyatt Earp and his brothers.

FBE: Is that what you mean by old nepotism?

BELLOW: There was an old nepotism that has changed since WWII. Before that, in most family businesses, you kept it in the family. There's a well-known group of families in Boston, for example, who built the New England textile industry. But it wasn't just an upper class phenomenon. The same thing was done among immigrants. Family members would come over from other countries at different points, and they didn't come as individuals but as families and ethnic groups. They habitually relied on extended families to get credit and for manpower and markets. All the ethnic groups created their own independent economies, and when businesses became successful they broke out of their ethnic economy. And that's how most nationally successful businesses started, as a family business.

But we forget all of this. People can't remember when they weren't in the middle class. They can't remember how they got here.

FBE: How did nepotism earn its bad name?

BELLOW: The old nepotism was discredited by the Crash of '29 and the Depression. People began to feel that the American business elite was too nepotistic, they had gotten rich and given out partnerships to sons and sons in law, they allowed family interests to outweigh business rationale. It was the subtext of the Depression, and it had a powerful and lasting effect on our view of nepotism and family management in general.

After WWII, American business went global. There was a boom in the economy, and a new era of corporate management and governance was introduced. Along with that came efficiency, meritocracy, etc. It was the era in which nepotism rules were instituted in big corporations and government. And that was a good thing. It's not my purpose to say that nepotism should be left alone, because what you get then is what you see in Nigeria, India and Brazil.

FBE: But we've gone too far. Would you say we've thrown the baby out with the bath water?

BELLOW: We still need nepotism. It still has a role. The story in my book is the war we've fought since the American Revolution, not to get rid of the family itself but to limit and curtail the influence of family interests in both the public and private sectors. We did that in the interest of greater efficiency and fairness. However, I argue that in our attempt to get rid of nepotism, we haven't stamped it out but transformed it. What makes it new is that it respects fairness and merit. It's a new nepotism regulated by a deep-seated commitment to those values.

FBE: But it doesn't always work.

BELLOW: Of course, there are and always will be cases of poor judgment by parents and children failing to live up to expectations. If you look at the great dynastic families, you can see persistent patterns, and it would behoove family businesses to pay attention to them. It's all common sense stuff: overbearing parents... sibling rivalry... intergenerational tensions... respect vs. trust.

FBE: There are many examples of family businesses that have failed.

BELLOW: Yes, and often there is a great deal of damage done when family businesses break up. For example, the Pritzkers, a powerful real estate family in Chicago, was a multi-generational business founded by Jewish immigrants 40 or 50 years ago. Later it was taken over by the sons and turned into a multi-million dollar hotel empire. And the Pritzkers became pillars of Chicago society, contributing huge sums of money to the arts, hospitals, and other philanthropic concerns, including a major architecture prize. But last year, they announced they were dividing up their holdings. There were quarrels about money and they broke up the family trust. There are two things to say about that: First, it seems to be a good thing to some who think having too many wealthy families is dangerous, who think inheriting too much is money is not such a good thing. We think it's better for people to earn their money, so we're sometimes happy when a wealthy family is broken up... that it's right and just. But, there's another way to look at it. Now the city of Chicago has lost a great asset because the new broken family will probably give their money on a much smaller scale.

FBE: Which brings up the issue of family businesses and their relationship to the community.

BELLOW: More often than not, there is a strong relationship between family businesses and the community. But it's usually the family business that has an awareness of the importance of them being in the community, while the corporate hierarchies outside the communities don't see it and don't always care. Heirs to a local bank know very well how important they are to the community. Think of Jimmy Stewart in the movie, "It's a Wonderful Life." If Home Depot goes out of business, who cares, but if the corner hardware store fails it's a sad thing for the community.

FBE: Which brings us back to the new nepotism. You say the children are returning to their family business roots.

BELLOW: There is a swing back the other way. People don't want to work in the corporate environment. They want to be part of a family enterprise and build something to leave for their children. The family business is perhaps the only way to leave something for your heirs and the best reason to stick around instead of moving to LA.

FBE: So how are the new nepotistic heirs faring? At FBE, we deal with inner-family struggles that affect the business side.

BELLOW: There's nothing wrong with sibling rivalry. It may give people some comfort to see family dynamics as disruptive, and many think that they force the business to be counterproductive. But the opposite is true. History shows that these are powerful forces and they often supply the motivation and drive that gets people to strive for excellence and give that last ounce. If George W. Bush feels he has to finish his father's work in Iraq and prove that he's the legitimate heir, so much the better for the U.S.

Sidebar Interview: DON SCHWERZLER

FBE: Don, you've now read Adam Bellow's book and FBE's interview with him. How do his insights shed light on your work with family businesses?

SCHWERZLER: First of all, I have to express my gratitude to Adam for speaking with us. He has written an outstanding book that anyone in a family business should read. There are many insights I've garnered from reading the book but one of the more profound is his concept of the "new nepotism" that now permeates family businesses in America. I've been advising family businesses for a long time and he's right. Today, second and third generations are not being drafted into the business as much as they are choosing to come in. And, as Adam points out, that creates a very different dynamic for both the family and the business.

FBE: A better dynamic?

SCHWERZLER: In most cases it's better because it eliminates some of the negative stigma that's attached to nepotism. Under the old nepotism paradigm, non-family members felt cheated when the family owners deliberately groomed their children to come in and snatch their jobs away. That flies in the face of our belief in meritocracy as Americans. But when the initiative comes from the children, others in the company can be more sympathetic with the parents' situation.

FBE: How does all that affect your work with families in business? How can you help?

SCHWERZLER: At the Family Business Institute , we are able to bring an "objectivity" in dealing with areas of concern such as nepotism and the issues around executive competency. Generally, parents want to confirm their offspring's ability to run the business or establish in everyone's eyes that the kids have in fact earned the right to take on the business. In other words, when they come into the business, are the kids taking charge or taking over? The difference in perception is very important to others in the company.

FBE: It's hard to know beforehand how a family member will perform once they become a part of the business. What helpful tips do you offer for assimilating children into the company in a way that assures a smooth entry and in a way that doesn't alienate non-family employees?

SCHWERZLER: We have some standard recommendations for family businesses. One is to adopt rules of entry that family members wanting to work in the business must adhere to. Those could include requirements that any family members must have a four-year degree and/or that they work outside the family business for 2-5 years to learn about business in a competitive environment. In some cases, we recommend that they adhere to certain codes of conduct.

FBE: What about family members who have passed those requirements and are seeking to climb the ladder? How can owners continue to avoid the negative perceptions about nepotism?

SCHWERZLER: Establishing an advisory board is a wonderful way to help sort out these kinds of issues in a manner that provides a win for everyone. The board provides parents a non-biased entity who can say no the children who are not qualified. If a family member passes muster with the board then non-family managers and employees see that it wasn't just a deal that was struck between family members. An advisory board allows on-going "objective" monitoring of the family situation in case things don't work out.

FBE: Through your organization, Family Business Institute, as well as your website (www.family-business-experts.com), you work with families in business who want to maintain happy family relationships and healthy business practices. Is there often a conflict with that and how do you overcome the potential disasters?

SCHWERZLER: One way is for the family business to walk through a process of self-examination that includes such things as developing a family mission statement before creating the business mission statement. Similarly, we recommend developing a strategic plan for the family that can be incorporated into the strategic business plan. All these and other practices are good for building consensus among family members that will spill over into the business side.

FBE: Do you offer tools for family members to learn good business practices?

SCHWERZLER: Yes, In association with Dr. Kenneth Mackenzie, we are publishing a handbook called "Creating Legacies through Leadership," which will be available very soon on our website. The idea behind it is that families absolutely can prosper working in the same business but especially when they understand and practice good leadership skills. Dr. Mackenzie has devoted twenty years to researching businesses in America, and from that has developed 55 leadership practices that are common to successful businesses. It's a highly effective tool that we now recommend to all of our clients.

FBE: Why the frequent use of the term "legacies"?

SCHWERZLER: In our work with family businesses, we try to help clients identify whether they are operating as a "family first" business or a "business first" family? Either way, the organization has to come to terms with the direction of the company and how that direction will affect its long-term success. And long-term success for both the family and the business means establishing a legacy that will last from one generation to the next. One recommendation we make is for companies to produce "legacy books", which not only highlight the history of the company to that point but also set the stage, in terms of values and priorities, for the company's future. Whether we think of ourselves as a family in business together or a business run by a family, we're still talking about leaving a legacy.



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