8 minute read 29 Mar 2018
woman hanging help wanted sign shop window

How family businesses find and nurture the right mix of talent

By

Helena Robertsson

EY Global and EMEIA Family Enterprise Leader

Leader in helping family-owned businesses realize their ambitions. Trusted tax advisor. Excited and proud to collaborate with professionals around the globe.

8 minute read 29 Mar 2018
Related topics Workforce

Family businesses must recruit and train talented individuals regardless of whether they’re family or not.

As they evolve through the decades and across generations, how should family businesses recruit and manage talent?

Most family businesses need to attract skilled staff from outside the family. This helps them secure the full breadth of skills and perspectives they need. And it ensures that the business can continue to thrive if young family business members decide that their future lies elsewhere.

However, securing top non-family talent is not a straightforward task. It requires family businesses to create an environment in which skilled and independent-minded people can flourish.

Businesses should also nurture the talent that exists within the family. They need to develop the younger generations, who have grown up with the business and who live and breathe the family’s values. And they must continue to make the most of older family members, who can provide support and mentoring, drawing on their years of experience.

So should family and non-family members be treated differently when it comes to recruitment and retention strategies?

There’s no single answer to finding and developing talent, but there’s much we can we learn from the approaches that have worked for some of the world’s leading family businesses.

Nurturing all of your employees

The value of nurturing family and non-family talent alike is well-recognized at British family business William Jackson Food Group. Nicholas Oughtred, the company Chairman, says: “You need to constantly invest in all your people, whether they are family members or not. It is incumbent on us as a family to make positions in the company as challenging, interesting and rewarding as we can.”

One example of how William Jackson makes this investment is in encouraging all its senior managers — family and non-family — to enroll in an executive course at Harvard Business School.

And the achievements of William Jackson’s non-family CEO, Norman Soutar, demonstrate the benefits of this widely supportive approach: his 10 years at the company have seen a 200% rise in revenues.

Onboarding non-family members

But how can family businesses better integrate non-family members into the organization?

Here are some common approaches from top family business leaders:

Absorbing the family’s culture and values

Talented non-family staff members should be encouraged to immerse themselves in the company’s history and to absorb the family’s values.

In 2015, for the first time in the eight decades of its existence, Switzerland’s SCHURTER Group appointed a non-family member, Ralph Müller, as CEO. However, before being chosen for the top job, he had worked for 10 years at the company and had become accustomed to the company’s culture and values.

He expressed his commitment to the company’s values at the time of his appointment. “Our management principles — based on role models, trust, responsibility, change and connections — will help me to drive the company ahead even further, following the values of the founding family," he said.

When training non-family talent, many family businesses put a strong emphasis on the company’s culture and values. This is important because non-family members will not have had the immersion in the family business’s culture that family members have often had from a young age.

But, of course, training needs to cover more than just culture, and should be open to all, family and non-family alike. The Spanish food processing firm Grupo Calvo uses training to develop talent at all levels, according to company’s Honorary Chairman José Luis Calvo.

Finding and developing cultural competence

The best family businesses are built around a strong culture that unites long-term employees and family members. For many family businesses, however, there comes a time when they decide that, to get the skills, experience and fresh perspectives they need, they must appoint leaders directly from elsewhere.

Preparing the organization for externally hired leadership has its advantages, even if the company continues to be managed by the family for the time being, as Guido Vanherpe, the CEO of La Lorraine Bakery Group, explains: “The best way to prepare a company for the future is to prepare it for non-family succession and management. You don’t put unnecessary pressure on the family, and you don’t give limitations to your company.”

The Vanherpe family at the Family Business Award of Excellence Ceremony

But when it comes to headhunting from outside of the business, how can family businesses ensure that non-family leaders are a good fit?

Around 10 years ago, an increasing number of family businesses were looking to hire non-family members as their CEO, as William Jackson did so successfully with Norman Soutar.

But their success was not replicated by all family firms. One reason for failure was that some incoming CEOs believed that running a family business was like running any other type of business. Another was that the family didn’t spend enough time preparing to integrate a non-family CEO.

So what do organizations need to do differently when hiring in?

When selecting a CEO, all organizations must, of course, make sure that candidates have the necessary formal competencies, such as educational achievement and relevant experience. But they must also make sure that potential non-family leaders have “cultural competence,” an understanding and awareness of how to work with the cultures of different organizations.

Cultural competence is particularly important for new leaders at a family businesses, because family businesses tend to have such strong and distinct cultures. But the responsibility for making the relationship between the business and its new leader work doesn’t just lie with the leaders themselves.

When a CEO has spent many years at a company, he or she has had time to learn the culture. But new hires have to be initiated into it, and they should be helped to develop an understanding of the family’s values. And while the CEO role is a particularly important one, this principle applies to any role that non-family members take on in a well-established family business.

Choosing the right family members

While serious consideration must be taken when employing non-family leaders, equal care needs to be taken when bringing family members into the business.

We asked family business leaders to share some of their insights about how to select and nurture the right family talent.

Gaining outside experience

Many family businesses require family members to prove themselves in the outside world before they can be considered for roles in the firm. This makes certain that only determined and committed family members join the business. It also ensures that there is a flow of new ideas and skills into the business, which are vital in the ongoing search for growth.

Such a careful approach to hiring within the family has been adopted by Denmark’s Danfoss, which worked with a professor of family business to create the right structure for the third and subsequent generations’ relationship with the firm.

At Danfoss, the next generation is given the opportunity to apply for a position in Danfoss. But to secure a post, they must have achieved various goals, including a postgraduate degree, fluency in English and experience working outside the business, preferably abroad.

According to Danfoss’ Chairman Jørgen Mads Clausen: “No one, regardless of their name, can claim a position at Danfoss without being qualified and better at the job than non-family professionals.”

This approach has also proved to be valuable for Singapore-based industrial firm Jebsen & Jessen. Heinrich Jessen trained as a tropical biologist, and worked in the jungles of Papua New Guinea, before joining the family firm.

“With my environmental experience, I felt I could make an impact on the business,” he says. “So I had a conversation with my father about how we could address various environmental and safety risks for the company. I thought to myself: ‘Maybe that was the job for me: to implement an environmental strategy for Jebsen & Jessen.’”

Learning the ropes

For many family businesses, treating family and non-family members equally is of paramount importance.

Canada’s Eddy Group is very careful about bringing in family members. “When a family member joins, there can be no sense of entitlement. No one is treated differently,” says group President Robyn Eddy, referring to her daughter and another three members of the fifth generation who are now Eddy Group employees.

Eddy employees outside a company factory

The advantage that many family members have when they join the family business is their experience of working there from a young age. Vesa Mäenpää of Finnish retailer Tammer-Tukku started at the age of 7 cleaning the warehouse, while Trisha Lemery worked part-time at her family’s business, American metal alloy manufacturer Winsert, through high school and college.

Starting work at the lowest level and then being fast-tracked through different layers of the organization can be excellent preparation for leadership. It allows young family members to see all sides of the business and to experience what it’s like to be an employee as well as a manager and family owner.

This approach helps family members to become more empathetic and understanding managers. And it gives them hands-on experience of the type of small day-to-day business challenges that can sometimes escape the attention of those in the boardroom.

Making the most of all the talent available

Family businesses have a unique challenge when it comes to balancing and nurturing the skills and enthusiasm of the next generation and non-family members.

Leading family businesses insist on the need for family members to prove themselves and gain experience outside the business in order to be ready to make a valuable contribution if and when they join.

These businesses also select the right non-family staff when the need arises — those who not only have the necessary experience and skills, but who also are best able to absorb and understand the family values and culture.

When they achieve the right balance, family businesses can make the best use of all the talent at their disposal.

Summary

To get the right mix of talent, family businesses need to recruit and train family and non-family members.

About this article

By

Helena Robertsson

EY Global and EMEIA Family Enterprise Leader

Leader in helping family-owned businesses realize their ambitions. Trusted tax advisor. Excited and proud to collaborate with professionals around the globe.

Related topics Workforce