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