Finding Non-Family Leaders for the Family Business

In a 2016 PwC survey of next generation leaders in family businesses, 69% of respondents said that they wanted to bring in non-family managers to help modernize/professionalize the family business.  The benefits of incorporating non-family leadership into a family business, particularly at the board level, are well-documented, including objectivity, outside expertise, skills where there is not a qualified (or willing) family member, and more.  If next generation leaders are heeding the sage advice to incorporate non-family leadership into the family firm, implementing such advice is a particular challenge in the current labor market. 

Employers of all stripes are facing the same challenge in hiring: there is a dearth of candidates with the soft skills necessary for success, such as critical thinking, the ability to communicate clearly, taking initiative, problem-solving, and getting along with others.  In other words, employers across the board seem to be struggling to find exactly the type of candidates that family businesses who are hiring non-family leaders should be seeking.    What’s a family enterprise to do?  There are a few strategies that can help family businesses find, develop, and retain key, non-family leaders: 

·     Continuous Networking.  The best source of candidates is networking.  Leaders should always be networking and, in that networking, keeping one eye open for high-potential candidates.  Sometimes that might result in stumbling upon an ideal candidate when the organization doesn’t have an opening.  In that case, consider creating a position.  Bringing a qualified, high-potential candidate into the organization when he/she is available and then grooming him/her for leadership within the context and values of the organization can be invaluable and avoid the difficulty of needing to hire someone and not being able to find a qualified candidate at that particular time.

·      Identify and Develop Talent Within.  Developing talent from within (both key internal employees and family members) pays dividends not only now, but in the future as well.  Employees will have the training and resources to perform at a higher level, the organization will have a deeper bench of talent from which to draw future leaders, and continuous learning and opportunities for advancement will create an incentive for valued employees to stick around for the long term.  What’s more, developing leaders from within, leaders who are a known asset and presumably share the same vision and values as the organization, reduces one of the riskiest activities in which organizations engage: external hiring.

·      Effective Compensation Plans.  When an organization has strong individuals and implements effective programs to develop them, it is important to incentivize those key employees to stay.  Create compensation structures that align with your values and incentivize people in alignment with desired outcome.  For key family members, this might mean considering opportunities for increased ownership over time or capitalizing on the non-economic reasons that individuals choose to work for the family firm.  For key non-family employees, it might mean exploring options like nonqualified retirement incentives or other creative, long-term reward programs.

·      Think Outside the Box.  Qualified candidates come in all shapes and sizes.  Don’t limit the search to only candidates who fit a certain mold.  Look at the whole candidate, not just the job description.  The work ethic, critical thinking skills, and leadership necessary to accomplish one thing in life can show the grit and soft skills necessary for success in other areas, as well.

·      Trust Your Gut.  Your instincts may be your most valuable asset in identifying and developing key talent.  Do the due diligence in each searches, ask for reference checks, have candidates interview with multiple employees (and listen to the feedback your employees provide), but, ultimately, trust your gut.  Hiring is one of the most difficult things that organizations do; trust your instincts for hiring key employees.

Finding talent in today’s labor market is not easy.  In fact, hiring trusted family members who already align with the organization’s values and culture is a distinct competitive advantage of family firms.  However, as the next generation survey recognizes, there are also benefits to bringing in non-family leadership.  These strategies will help your organization set the foundation for building a strong bench of talent within your organization over the long haul.