The Institute for Family Enterprising Blog brings you the latest in events, research and thoughts from within the nexus of family business and entrepreneurship. We will also use authors and findings from our major research arm - the STEP Project.
Family firms often face the challenge of attracting and retaining non-family managers. Building top management teams with family and non-family leaders is critical if family businesses are to find long-term growth and success. Thesis: Family businesses have a unique opportunity to build highly loyal and productive teams, but there are some inherent challenges that they must identify and overcome if they are going to be successful over the long run. 1. Working in a Family versus Professional Culture - While a family atmosphere can be a competitive advantage to family businesses it can be hard to attract high level managers if the culture is more familial rather than professional. 2. Moving from an Intuitive to more Intentional Style of Leadership - Entrepreneurial and family leaders tend to be very intuitive in their leadership practices and decision making. 3. Establishing an Explicit Ownership Risk Profile - The "risk profile" of family owners and managers direct many of the decisions in the company such as reinvestment criteria and growth strategy. 4. Having a Profit and Performance Culture - This is an extension of the family risk profile discussion. If families expect a "legacy pass" in the marketplace, the business can loose their competitive edge because of this laissez fair approach to the future. 5. Living with the Family "Glass Ceiling" - At the end of the day, all non-family leaders know they do not have the last name of the business owners and they are in a different category of leadership. 6. Managing Next Generation Entitlement Expectations - When the next generation feel the family business owes them a job regardless of their competency it can significantly undermine the motivation of other leaders, not to mention erode the capabilities of company. 7. Having an "Old Boys Club" Gender Imbalance - Family businesses can become a male dominated "old boys club" that simply initiates its younger male members into the club. This not only doesn't give daughters a chance to enter the business, but it keeps highly competent women in general from feeling comfortable in the company. 8. Providing Compensation and Long-Term Incentive Packages - Family businesses can have a hard time establishing market-based compensation packages, including equity or phantom stock, particularly in relation to family members who might be making above market "family salaries." 9. Involving Leaders in the Succession Discussion - Families tend to be highly secretive in talking about the future. While there are some good reasons for this secrecy, non-family leaders want to know what the future holds and how it will affect them. 10. Valuing Non-Family Leaders - This point is a summary mindset. Valuing non-family leaders means treating them like full members of the team, involving them in all levels of decision making, finding out how they define success and fulfillment, building a highly competent team around them, professionalizing the culture and practices, in short being a true "team."
Posted by Timothy Habbershon on July 18, 2006 17:21 | link
