Tuesday, July 11, 2017
“Play nice and share!” As a child growing up, this was a frequent refrain in our home. My parents were instilling in us important values. However, that egalitarian mantra can, at times, carry forward in an unhealthy way into opportunities for leadership of the family business. That egalitarianism and sharing –which can be an important value to many families and which can be important to the success of many families and organizations – is not the best way to select a leader. Sharing the mantle of leadership in the family business may not always be in the best interest of the family, the business, or the ownership.
The role of CEO brings unique challenges and complexities for which not everyone is suited. Yet, all too often, family members jockey to each have a turn as CEO. “You had your turn, now it’s my turn” is not a succession plan.
For a business family that desires to build a legacy and grow profitably well into the future, the following guidelines have proven helpful in ensuring that the most qualified individual is leading the business:
1. Develop a Family Employment Policy that encourages family members who desire a leadership role to gain work experience outside of the family business and specifically defines the objective criteria necessary for employment and leadership.
2. Nurture mentoring and coaching between the current CEO and the next generation of leaders.
3. Clearly define, in writing, the job description for the CEO. Identify the expectations and metrics to which he/she will be held accountable. This should also include the knowledge, skills, and abilities expected in the role, as well as a commitment to the family’s values and objectives. Have the senior generation guide the process of selecting their successors before they leave.
4. Seek the support of non-biased, third party perspectives in evaluating and selecting the next CEO. This may mean soliciting input from non-family directors or members of the advisory board or from qualified advisors.
5. Be open to a non-family CEO for a season if a family member is not ready to assume leadership.
6. Set the CEO up for success. Develop a communication structure and a governance system that efficiently and effectively outlines the processes for the family, the ownership, and the business to keep focused on the correct goals and objectives.
7. Revisit these guidelines annually.
As a family, commit to a process that will find the most qualified leader for your family business.