As family owned companies grow and prosper from one generation to another, it is not uncommon for them to bring in non-family executives to round out the expertise of family members. When family businesses survive well into the third and fourth generations, there are generally more non-family executives than there are family executives involved in the company. Consequently, there are hundreds of thousands of non-family executives working in family businesses across the country. While the role of this executive is one of the most critical roles in growing family enterprises, it is often considered one of the most confusing and complex.
It has been my good fortune to learn what non-family executives want, directly from the nearly 100 of these business executives that I’ve coached, interviewed, and surveyed over the past decade. Additionally, I have personally served as a non-family executive, and have reported directly to four different non-family chief executive officers. I have also had the opportunity to talk to many family owners as well, and it is my conclusion that in order for families to successfully pass from one generation to the next and for businesses to flourish, there must be a win-win for family owners and for non-family executives.
To create a win-win for family owners and for non-family executives, family owners must:
1. Find the right person for the job
Due diligence is critical when looking for someone with the right fit to be a non-family business associate for your company. Successful non-family associates should have all of the following characteristics:
A. Be competent and have a proven track record of success in your industry or a similar one.
B. Have the ability to stand up to the family when needed, and the judgment to know when it is not, because although a healthy ego is good, arrogance is not.
C. Have empathy for the family owners because the owners’ names are on the door, not the name of the non-family executive.
D. Understand that a family firm is different from a public company with regard to goals, dreams and hopes for both the family and the business.
2. Speak with one voice
If 10 different family members tell a non-family executive to do 10 different things 10 different ways, the executive cannot possibly win and neither can the family. That’s why it is critical for the family to get together and decide who will be their official “voice”. It could be the chairman of the board of directors or the chairman of the family council, but it is imperative that this leader solicit feedback from all relatives involved in the business and for the family to reach consensus, if possible, before directing non-family executives. If the family owners do not have an owners council or a family council, that should be the very first order of business. The saying: “United we stand, divided we fall” has great relevance for families who want their businesses to prosper. There are many books on how to start a council, as well as consultants who can help you.