24176254. Privileged Performance

24176254. Privileged Performance - Francisco...

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24 Foreign Policy nament. Are you going to choose Ronaldinho? Or the children of Pelé?” In other words, nepotism gets a red card. [ In Box ] Privileged Performance I f you want to ruin a business fast, give it to your kid. Accord- ing to a recent study in the Ameri- can Economic Review , firms that appoint a ceo who is related to either the departing ceo , a founder, or a major shareholder significant- ly underperform when compared to companies that bring new blood into the corner office. Hiring the new boss based on the family tree translates into a 14 percent decline in profits within the first three years. And if the heir apparent didn’t attend a selective U.S. university, profits sink a whopping 25 percent. “The results suggest that ceo talent is very valuable,” says author
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Unformatted text preview: Francisco Pérez-González. Last year, a London School of Eco-nomics/McKinsey study found simi-lar performance lags in firms run by second genera-tions in Britain, France, and Ger-many. The com-bination of a small selection pool, along with the lack of moti-vation by family members who are guaranteed jobs, predictably leads to less successful businesses. Pérez-González puts it another way: “Think about a soccer tour-The family business: Bill Ford (right) handed his troubled company to an outsider in September. TOP:BILL PUGLIANO/GETTY IMAGES; BOTTOM: CLOCKWISE FROM TOP LEFT: COURTESY OF YOUTUBE; FRANCOIS LENOIR/REUTERS; MIKE HUTCHINGS/REUTERS; ISTOCK-PHOTO; ISTOCKPHOTO; COURTESY OF STARBUCKS; ISTOCKPHOTO...
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24176254. Privileged Performance - Francisco...

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