Tag Archives: integrity

Case Study: Heineken as a Family Business

by John L. Ward

I had occasion to hear a talk by the Chairman/CEO of Heineken, Jean-Francois van Boxmeer.  So much of what he said reaffirmed our observations and experiences. First, some context, then our shared views.

  • Heineken is about 150 years old and controlled by the fifth generation of the Heineken family. They are the third largest beer company in the world.
  • The family has often relied upon non-family management, but always participated actively as owners. Mr. van Boxmeer started with Heineken immediately out of school. He held positions in Africa, Poland and Italy and proudly announced he had never looked for a job elsewhere. He’s been CEO/Chair since 2005 – 8 years already.
  • The Heineken family has voting control but only 25% of the economic interest via a holding company owned 51% by the family that controls 51% of an operating company. The rest of the shares are publicly listed.
  • The company’s core brand represents 17% of revenues. Otherwise they have more than 250 local brands around the world, 28 of which are long-term partnerships that represent 25% of all sales.

Observations

  • Mr. van Boxmeer was asked of the advantages and disadvantages of being a family business. The disadvantage he quickly noted was the “constraints of the balance sheet – especially in an industry where you must grow or die.” On the other hand, numerous advantages:

―   Patience and the long-term view.
―   The “nerve” to courageously hang in during tough times.
―   A special spirit of passion for the business.
―   The people like working for a family.
―   The long nurtured capability to work with partners and to integrate   acquisitions into the Heineken culture.
―   Long-term value is more important than share price.
―   Market share is more important than earnings.

  • What does it take to successfully integrate acquisitions?

―   Clear direction
―   Mix people up
―   Get rid of the 10% who don’t buy in
―   Use people’s strengths

  • What about the culture?

Culture is what you do, not what you say in a brochure. The key Heineken values are

―   Passion for quality*
―   Enjoyment*
―   Respect*
―   Integrity*
―   Entrepreneurship
―   Demanding of results

The first four (*) we note are commonly distinct for family firms. It’s interesting to note the seeming contradiction of “enjoyment” and “demanding of results.” Maybe not a contradiction?

  • What he looks for for cultural fit in new hires?

―   Integrity – doing what’s best for company (what we often describe as “doing the right thing”).
―   Competence, of course.
―   Empathy.
―   Low ego – the credit belongs to customers and employees.

  • A classic cultural contradiction he noted was to balance local culture and company culture. This, he feels, is another special capability of Heineken.

In sum, the long-term view, strong DNA-based culture and special dynamic capabilities define Heineken, even as a listed company and even though the family only holds governing roles.

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Ethics & Integrity

Stephanie Brun de Pontet
Stephanie Brun de Pontet

I am a member of the Vistage organization and I recently responded to a question posted by a fellow member on a discussion board there and I thought I would share my thoughts here as well.  The question was: Are ethics and integrity in the business community a thing of the past?  My response was as follows:

While family owned businesses don’t often get good press, in my experience they are among the most ethical businesses out there for a number of reasons. First, they have a true long-term view: they make investments and decisions based on the impact over generations, not just a quarter’s worth of financial results. Second, they are often deeply involved in their communities – feel a sense of real human connection to their employees and the town in which they and their company ‘grew up’ – as a result, they often give back through serious philanthropy, community service efforts, and invest in education and skill building of their teams. Third, there is the ‘name is on the door effect’ – when your family’s reputation is directly connected to a business – that puts an additional level of focus on ethical questions. The Smuckers family business is a great example of this & they embed this idea in their slogan: “With a name like Smuckers, it has to be good…” 



While clearly not every family controlled business reflects a strong ethical compass (and regrettably it is the poor behavior of a few that is most often reflected in the media) – I find a tremendous number of family owned enterprises operate their companies with the very best ethics – which contributes to why they are so key to our economy.

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