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Lauders win Family Business Leader of the Year 2009

Readers of Campden FB and have voted Ronald and Leonard Lauder as the winners of the second Family Business Leader of the Year Award. Following in the footsteps of Emilio Botin, who won Campden FB's inaugural award last year, the Lauders came out on top of a very tight contest.

Securing 29% of the vote, brothers Ronald and Leonard beat Suntory chairman N Saji (22%) and Brazil-based P Bellini (21%) into second and third place respectively.

The two sons of cosmetics pioneer Estee Lauder impressed with the way they oversaw one of the most seamless family business successions of recent times. The transition, which began back in 2007, was concluded earlier this year when non-family COO Fabrizio Freda, brought in from Proctor and Gamble, was appointed CEO and Leonard's son William took over the chairmanship of the board. Ronald retired from the company's board of directors in July to be replaced by his daughter Jane.

Succession is often one of the most difficult and stressful aspects of working within the family business, and a seamless and successful succession such as the one performed by the Lauders has clearly impressed fellow family business leaders. However, it was not a quick process but one that may be beneficial for other family business facing similar succession issues to consider.

The family decided in 2007 that the time was right to pass over operational control of the business to non-family management, but in order to ease the transition process Freda was not given the CEO role straight away. Instead he served as president and COO until July this year. Third-generation William Lauder had been CEO since 2004 and continued in the role until the handover. This two-year transition period allowed the family and Freda gain an understanding of one another and work out any problems before Freda officially took over the top job.

Upon Freda's move into the CEO role, William Lauder said: "Fabrizio has brought together the Estee Lauder Companies top talent across all of our brands, regions and functions into a new leadership team that will be fully integrated. I am highly confident that this new team, under Fabrizio's excellent leadership, will deliver strong, sustainable results to all our company's stakeholders."

But the move from family to non-family leadership was not the only succession change at Estee Lauder this year; both second-generation brothers passed the mascara baton onto the next generation this year too. Leonard stepped aside as chairman of the board to allow his son William to takeover and Ronald resigned his seat on the board altogether in favour of his daughter Jane.

Ronald made his feelings clear about the future of the company in July when Jane's promotion was announced: "This is an important opportunity for my daughter Jane to continue to evolve as a leader and help the company carry out the next phase of its growth," he said.

Estee Lauder was founded in 1946 when Joseph Lauder and his wife Estee began producing cosmetics in New York. It grew into an international business under the leadership of Leonard, who joined the company in 1958 when it had revenues of just $800,000. During his time as president (1972-1995), CEO (1982-1999) and chairman (1995-2009) he introduced professional management at many levels of the business and launched several brands including Clinique. Ronald, who took a less hands on role in the business, served on the company's main management board for 49 years before retiring this year. Today the business has revenues of $7.3 billion.

Both Ronald and Leonard Lauder made a significant contribution to the growth and innovation of the business, whilst also having the strength to recognise that sometimes family management can be enhanced by the introduction of a non-family member. But perhaps their most important legacy is their willingness to let the next generation have their own opportunity to shape and grow the business. The admiration this has earned the brothers from their fellow family business leaders illustrates perhaps better than any other marker just how special and important an achievement this actually is. 

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