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The Murdoch Lesson: Your Kid Can't Cut It

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Succession planning is tough, especially when you're considering relatives. And that's usually the case of family-based companies.

Consider Rupert Murdoch's plight with his son's leadership at News Corp.'s (NWS - Get Report) British papers, where a phone-hacking scandal has seriously jeopardized revenues and certainly the reputation of the empire.

James Murdoch

James Murdoch, the youngest son of media mogul Rupert Murdoch, has relinquished his position at News International to concentrate on blah, blah, blah . . . .

No disrespect intended. Daddy is just saving his boy, as father's often do. However, is Rupert teaching James the values of leadership and consequences? Or the values of paternity and privilege?

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With respect to the scandal, the old question emerges: "How much did James know and when did he know it?" Was he complicit, complacent, corrupt, incompetent or simply disconnected from the reality of his company's culture?

As is generally the forensic determination in a scandal, recent revelations were symptomatic of a culture of lax oversight and routine misconduct. The bottom line: whatever was going on, had been going on so long, it had become "acceptable" -- until of course it came to the light of day.

A Worthy Successor

There is so much to consider beyond credentials, education and even blood, when you're in search of a CEO. In spite of the senior Murdoch's obvious love and leaning toward his son's prospects as a leader, something went awry. Either they share the same flawed operational oversight values or young Murdoch simply wasn't ready and fooled his dad.

This is a sad tale that happens in many corporate situations, regardless of nepotism. Selecting someone to lead the company, a division, or function is too important not to ensure readiness and fit with a candidate for a senior position. Shy of their perfect readiness, there should be a significant orientation, grooming and oversight period before unleashing someone on your employees and shareholders.

By the way, the "blah, blah, blah" on James' fate: His Dad is shifting him to another high-responsibility, high-authority, and no doubt, high-paid position.

Leaders are judged by both words and action. This consequence shows the son, News Corp. employees, customers, and shareholders how Rupert Murdoch views the ethical and legal standards of his company.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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