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Ensuring Success with a Non-Family Executive

Being hired does not mean you have earned trust.

This assumption is the single most common mistake the newly hired non-family executive makes.

 

The situation often plays out like this: after a thorough vetting and hiring process, you have been hired for the job. And, in your view, this means that the family business has endorsed you to lead the vision, strategy and execution of the business, just like any other business, right? So why am I struggling?


The mistake here is thinking exclusively in terms of ‘business’ and forgetting the ‘family’ dynamic. To an executive without family business experience, this can seem illogical, after all you were hired to manage a business and it was your business credentials that got you the job. While inarguably true, this is only half of the picture: you have been hired to be the steward of a legacy that has taken the shape of a business.


Emotions and identity get tied up in legacies. But, for a business owning family, the business is also inextricably tied into how a family tells its story. As a non-family executive, managing the business is only part of managing the legacy and you need to figure out how to manage both at the same time.


The relationship between a non-family executive and the family is both complex and delicate – especially in the early stages. The family has acknowledged the skills of the new executive and the desire to incorporate them into their legacy, but trust is earned, not given. All parties must be proactive, open, and transparent to build a strong foundation so that when the interests of family and business diverge, trust does not fracture and both family and non-family can work together.


Our vantage point as a family business and as an executive search firm that helps family businesses recruit capable leaders has provided us the opportunity to get a clear view of what it takes to be successful as a non-family executive.


Here are five keys to success for anyone considering a role as a non-family executive.

 

Learn about family businesses.

Around here, we like to tweak a famous Tolstoy quote to say: “All happy family [businesses] are alike; but all unhappy family [businesses] are unhappy in their own way.”


One of the red flags in vetting candidates for non-family executive positions is the anecdotal fallacy. This occurs when a candidate assumes that their experience with one family business will be relevant to another. The opposite is also common – when a family business seeking their first non-family executive assumes that an executive with family business experience will always be better than one without. This simply is not true.


Exposure to and experience with family business is not a predictor of success when recruiting non-family executives. What is far more important is the executive’s ability to work within THIS family business’s specific environment. Potential candidates should acknowledge that each family business is unique, and each faces a complex set of issues, personalities, tensions, values, and traditions that play a more central role to success than their non-family counterparts. To succeed, they will need to dedicate time to learning about family business best practices – both in general and within that particular family business.


To ensure the success of a newly hired non-family executive, we develop tailored onboarding plans and advise our family business clients to encourage and support their NFE’s ongoing family business education. One core recommendation from our firm is the book “More Than Family” by Craig Aronoff and John Ward, the co-founders of the Family Business Consulting Group.



Learn the “Whys”

About a decade ago, we placed a President in a family operated real estate business. In her first few months on the job, she dutifully assessed the business and learned the operation. In this process, she found an old building on the balance sheet. The utilities were being paid, but there were no renters. The property seemed to be collecting dust. Moreover, it was an underutilized storage facility, so it made perfect sense to sell the property.


Doing so almost lost her the job. As it turns out, that simple storage unit was the first building the founder ever built. In the President’s mind the decision was simple: the business was losing money on an easily divested asset. Selling the asset was quick and easy win to show her value. Her mistake was that she never sought to learn about why the company owned the building despite its apparent lack of value.


In our experience, most family businesses will have quirks like the old storage facility. It might be a legacy technology, a factory layout, or a troublesome employee that can’t be fired. The natural temptation is to step in and fix the issue. Our advice is to avoid this “fix-it” mentality whenever possible and first explore the history behind the problem.


Learn the “Hows”

In 2019, a family-owned consumer goods business needed to bring in a non-family executive to oversee all manufacturing operations. The business, run by two brothers, had grown significantly over the past five years, and recently expanded into a two-million square foot facility. This uptick in complexity required outside expertise, so Stranberg took the assignment to help this business find a Vice President o