The Secret Life Of Young Presidents

It is, by contemporary standards, a secret society. Founded 32 years ago, it has about 4,000 affluent, powerful members, many of them the heads of some of the nation's most dynamic and successful companies. Current members include Leonard Lauder (Estee Lauder), W.R. "Tim" Timken Jr. (Timken Co.), Peter Farley (Cetus), Chuck Schwab (Charles Schwab & Co.), Tom Johnson (Los Angeles Times), Ray Hunt (Hunt Oil), Robert Low (Savin), and Rod Belden (Sykes Datatronics). But the organization has rarely been written about. Even when former Presidents Carter and Ford spoke at a recent meeting an Hawaii the press was skillfully excluded.

"We're just not interested in publicity," says Christopher Lehman, the former executive director of Young Presidents' Organization Inc.What the organization is interested in, according to Lehman and its own motto, is: "better presidents through education and idea exchange."

"It tailors itself to deal with the young, high-energy, successful entrepreneur," notes one member, Charles B. Housen, president of Erving Paper Mills, a family-owned business based in Erving, Mass. "That's who they're trying to nurture, and they really do a good job of it."

YPO, organized in 1950 by Ray Hickok, then president of Hickok Manufacturing Co., was created for people exactly like Housen: individuals who had inherited a family business, needed someone to talk to about the problems they were encountering, but found that no one -- employees, consultants, spouses, or priests -- understood what they were going through. No one, that is, except the president of another company. Following the death of his father, Hickok, at age 27, took over the largest manufacturer of men's belts and jewelry in the world. He found that his education and experience just weren't enough. "I felt that I needed broader management roots," he recalls. "And I felt that untold benefits would accrue by getting together with other younger presidents."

Hickok had a list of 600 prospective members compiled, contacted them in person, and found them receiptive. The first official YPO meeting in New York City included General Robert Johnson, then the head of Johnson & Johnson, and Douglas Fairbanks Jr., who ran a production company.

Housen's reasons for joining YPO reflected Hickok's concern. "At my own company, we have some very bright, energetic managers," he explains, "but I'm the boss. I say 'popcorn,' and they say, 'Terrific!' And I know popcorn's not terrific. I go to a YPOer and say 'popcorn,' and he says, 'Bull! What'dya mean, popcorn?"

Family-owned businesses still account for 40% of YPO's membership, but now about 30% of the members are entrepreneurs who head companies they founded, and the rest are "professionals" -- people who purchased a company or were hired to run one. About one-third of the companies are publicly traded, and some are among the biggest in the country. "Coal, construction, meat products, men's and boys' clothing, sawmills -- you name it, we've probably got it," observes Lehman. "We've got someone for every SIC code going."

To qualify for membership, a person must have become, before age 40, the president or chairman and chief executive officer of a $4 million corporation employing at least 50 people. The financial criteria differ for service companies and banks. The candidate must be recommended by two members of a local chapter and approved by a committee of the board of directors. Prospective members may approach the organization directly, but most are scouted by current members. There is an initiation fee of $600 and an annual membership fee of $600 plus the cost of individual YPO events. On their 50th birthdays, members are awarded a rocking chair and drummed out.

A number wind up in one of two alumni organizations, the World Business Council or the Chief Executives' Forum. Hickok, now 63, is the only lifetime member. Although he sold Hickok Manufacturing in 1971, he remains active with Ray Hickok Associates, a mergers and acquisitions concern, and the Ray Hickok Collection, which puts out a series of wildlife photographs, both based in Rochester, N.Y.

Many members, like Housen, regard the YPO affiliation as the most valuable of their business career. "I think I'd still be running a relatively small company if it weren't for YPO," Housen notes. "My growth was certainly enhanced because I found out that what used to be a mystique, wasn't. I mean, there were ways to do things, such as, how do you put together a financing program without putting everything on the line? How do you set up a communications system between your plant here and your plant in Indiana?"

When Housen joined YPO 10 years ago, Erving Paper Mills was a $12 million-to-$14 million-a-year, 485-employee papermaking concern; today, it is a $125 million, 1,500-employee corporation of 11 companies in eight states. "I don't think that I'd have had the confidence, as early, to do the things I've done," says Housen, who, at 50, is now preparing to depart from YPO.

Housen notes that as his colleagues leave YPO many of them sell their businesses, get divorced, or crack up. "YPO is a support system that tends to hold things together." He adds with a smile that he doesn't intend to pursue those options. Instead, in typical YPO fashion, he held a local YPO chapter meeting entitled "Me and My World" to deal with the rite of passage.

A tall, beefy man with thick features who occasionally refers to himself as "a boy from the small town of Erving," Housen has smoothed away the rough edges with education and impeccable tailoring. He seems the complete cosmopolitan. But it wasn't so in 1968, when he emerged as the general manager of Erving Paper Mills after his uncle died and his father retired.

Housen had a degree in economics, attended law school, and worked in the company. "I began as a kid," he explains. "I'd sold on the road, done the books on weekends." But he was unprepared for the rigors of running a sizable business.

"I was running al over the country, taking every course I could get, including ones offered by the American Management Associations." Finally, a more experienced hand intervened. One night at a party, the host took Housen and his wife, Marjorie, aside and said, "Now I want to talk to you young people about a great organization."

Housen attended a few meetings of the New England chapter and was impressed by both the organization and its members. Although an inveterate nonjoiner, he joined and soon began to appreciate the "very heavy learning and very heavy social experience" that YPO can offer. "I was thrilled that this was available to me -- that I could talk to people who had experiences that I was just growing toward."

YPO has its headquarters in New York City and an annual budget of more than $6 million. It has 86 local chapters and members in 47 countries, although most -- 3,200 -- live in the United States or Canada. The national organization each year has sponsored two "Universities for Presidents" -- intense, one-week programs offering a wide range of activities and covering a vast number of business and extracurricular topics, from R&D planning to holistic medicine.

The universities -- this year, for the first time, there will be three -- are generally held in exotic locales. "You might have dinner at the bottom of a volcano in Hawaii or a formal ball at a palace in Paris," explains Housen. The social events have given YPOers something of a rich-playboy reputation, but despite the pleasant distractions, learning better business management remains the principal concern. Housen recalls his first university -- about five course choices for every hour and a half of the day. "We arrived on a Sunday and got so absorbed in everything that, by Thursday, Marjorie was saying, 'Do you realize that we're in Athens?"