Tuesday, February 28, 2017
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 search
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
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.
Wednesday, February 8, 2017
“For everything there is a season, and a time for every matter under heaven: a time to be born, and a time to die; a time to plant, and a time to pluck up what is planted; a time to kill, and a time to heal; a time to break down, and a time to build up; a time to weep, and a time to laugh; a time to mourn, and a time to dance; a time to throw away stones, and a time to gather stones together; a time to embrace, and a time to refrain from embracing; a time to seek, and a time to lose; a time to keep, and a time to throw away; a time to tear, and a time to sew; a time to keep silence, and a time to speak; a time to love, and a time to hate; a time for war, and a time for peace.”
Ecclesiastes teaches us about seasons in life. The Byrds reminded us of this truth in their song, Turn! Turn! Turn! Just as seasons change throughout the year, seasons also change in a family business. Sometimes, the changing season means transitioning from one generation to the next. In nature, as winter moves into spring, there are specific changes that occur. Daylight lengthens. The sun shines warmer. Trees bud. Flowers bloom.
Likewise, as seasons change in family businesses, families need to take actively embrace the change and make it a healthy transition, which includes deliberate dialogue, agreed upon timelines, and a plan. Making the change of season for the next generation a healthy one requires planning, training, educating, specific experiences, collaboration between the generations, and preparation for the senior generation’s next phase of life.
Just as we plan for the spring season by putting the hats and gloves and boots back in the closet and by planting flowers in the flowerbed, a family business should prepare for the change of the family’s season by digging into to the following:
1. Committing to building the family legacy.
2. Drafting a written plan, along with a timeline, for the transitions to the next generation.
3. Implementing a feed-back mechanism for the next generation to understand how they are progressing.
4. Preparing development plans for the next generation that provide opportunities to learn about the values and vision of the family and that provide opportunities to learn about the rights and responsibilities of being an owner of the business.
5. Forming a team of professional advisors to support the family in the transition process.