How to attract the right Non-Family Executives and Non-Executives into the Family Business
27th October 2020
Senior appointments of non-family members into a family business can feel complex, a source of concern and a difficult step for some to take. It can feel like there are even more moving parts and considerations to get right than with other businesses, and the variables can be quite extreme. Generally, the size and scale of family businesses also mean that each and every senior hire takes on a greater significance in the business. The costs and negative implications of not getting it right will feel more concentrated, and this can often feel like too much of a barrier to overcome.
Family businesses, as we know, can range from small and medium sized companies to large multi-generational conglomerates, operating across numerous industry sectors and countries. Different family firms will have very different governance requirements, cultures, behaviours and needs based on their size, ownership structure, stage of development and many other factors. The degree of family involvement in the business, relationship of the family (siblings/cousins/range of generations) can also differ greatly and play a significant part in how the business operates.
But no two businesses are the same, regardless of ownership. The challenge of ‘getting it right first time’ is not unique to family businesses. It is something that all organisations find difficult. The purpose of this brief article is to try to understand why this is and hopefully provide some helpful advice that gives your organisation the best chance of getting it right first time.
We know that the purpose and function of an Executive appointment differs to that of a Non-Executive one but, for the purposes of this piece, we will consider the family versus non-family argument and considerations to be broadly similar, whether for an Executive or a Non-Executive appointment. Although their roles are very different, the levels of accountability and responsibility of the two are similar, and therefore the consensus and rigour of process to appoint either should be comparable.
Human beings are notoriously unpredictable. Our behaviours are not fixed, we change over time and have the potential to all react differently to a variety of circumstances. Even the most robust and rigorous of processes in searching, interviewing, referencing and selecting potential candidates will fall short in determining, with absolute certainty, if this person will be the right fit or not.
Realistically, I think you have to work with someone for approximately 6-12 months, and see them, their behaviours, characteristics and reactions under the whole spectrum of circumstances and conditions that may arise, in order to understand if this really is the right fit. So, we should not beat ourselves up that this is something that is difficult to get right.
It is similar for a candidate considering whether to join a business or not. He or she cannot expect to achieve perfect knowledge of a business, or its people, by going through an interview process. Candidates will form an opinion of the business based on every touchpoint, the speed of process and the personalities involved. But this can be far from truly accurate. The interview experience is generally not a reflection of true cultural fit, as each party is (should be) trying to impress the other.
We have known candidates to withdraw from a process or turn down a role if they felt they were not tested enough or really put through their paces at interview. Their perception of the business? Too informal and a lack of governance. Similarly, candidates will be put off if their experience during the interview process and the people they meet is austere, too formal and lacking both warmth and an appreciation that this needs to be a two-way process.
A quick word on culture, as this is the crucial intangible that we are trying the get right here. One of the definitions of company culture that I like to use is that it is only really evident when ‘a business and its leaders react to bad news’. Crisis and difficult times are when the true personality of the company comes to the fore. Not how the company would like to be perceived, but what it is actually like to work there and be put in that situation. Like a footballer practicing penalties, or a golfer imagining themselves holing a 12 foot putt to win the Open, it is impossible to artificially replicate the actual scenario, the pressure and stresses of the situation and how one will react.
More broadly, as mentioned already, all companies can struggle to get the fit right. This is certainly not just the domain of family business. We understand well why this does feel more complex and acute in a Family Business, but leaders in such businesses should not put themselves under even great pressure here. If I had to be pushed on why I think some Family Businesses do perhaps struggle more than others to get external appointments right, I would put this down to one of the following three areas. There are others, but these ones appear regularly:
1. Agreement that the needs of the Business might be best served by going outside the skill set of the current Family members
This will often be a timing thing and an acceptance that ‘right now’ we don’t have the right skills or experience in the family to do this. Why limit the potential of the business to the skill sets of the current family members, when there is so much external expertise and experience that might be key in helping the business (and family members) make that leap from good to great?
2. Creating the right environment for a Non-Family member to thrive in a senior role
Will this person be made to feel like a family member or will he or she always feel like an outsider? Could you imagine this person sitting round the family table at Christmas lunch and really contributing to the occasion? If anyone feels their opinion is less important (whether it actually is or not) if they feel it is, then the appointment will not work.
Family members will want to see the same level of commitment, dedication and passion for the business in a Non-Family Executive or Non-Executive as they have for the business themselves. These are characteristics and behaviours often associated with ownership, yet most Family Businesses are unable to offer ownership in some form or other in return. Those that can benefit significantly from higher levels of success in making external appointments.
There is another discussion to be had around the incentivisation of non-family members in leadership positions but, as with several other areas on this topic, it is not intended to go into detail on this here.
For the purposes of providing some sort of help and practical advice though, I would like to spend some time on the thinking and decision making leading up to an external appointment. Getting this right will go a long way towards achieving the best outcome for the business, and for the Executive or Non-Executive looking to join.
Therefore, some key points and questions to consider are listed below:
- Agreeing the timing of such an appointment. Why now, are we all in a position to support this (timewise) and are all stakeholders aligned?
- Clarifying the need and agreement around why we are going to the external market for this appointment? A real strength of the family will be in recognising that the skills required in this role at this time are best served out with current family members. Some family members might see this as a weakness. It is not. How can we as family members learn and develop from bringing in leadership experience gained in other organisations?
- Agreeing the search parameters early, the must haves and the nice to haves. Where might this person be sitting right now, what are they doing and why will it be more attractive for that person to leave where they are and to come and join our business? Be realistic and practical
- Are we testing for the right things, in the right way, at interview? Are we presenting ourselves in the best way to the candidate, in terms of their experience of our company through the recruitment process? Will the candidate feel that this is a two-way process? Career opportunity or ‘a job’?
- What might the career trajectory and the experience look like for this person coming in? Are we able to create the right environment for a non-family member to thrive? Has the development and positive impact of this person been factored in? Strong and ambitious candidates can have significant reservations about this when considering joining a family business. Don’t fall into the trap of hiring extremely bright and high potential people but then restricting their ability to add the value they are capable of, once part of the organisation.
- Beware the ‘perfect candidate’ This person is very unlikely to exist, nor is the ‘perfect opportunity’ for the candidate. A degree of flexibility and allowances need to be made on both sides.
FWB Park Brown have spent much of the last 27 years advising and supporting clients to identify, attract, assess, interview, appoint, incentivise and develop Board level Executive and Non-Executive talent, along with a wide range of other senior and mid-management type roles. Find out more.