Top 10 Considerations for Onboarding External Leadership into a Family-run Business
Joining a family-run business may, in many ways, seem the same as joining any other type of company. However, it would be a mistake not to recognize the unique set of challenges and considerations that come with a family-run organization.
Successfully onboarding a new executive hire into a family-run business requires careful attention to balancing professional relationships along with the range of family dynamics. Here are ten areas to consider during the process of onboarding a new leader into a family-run company:
1) Navigating Family Dynamics
Family Influence: Many people mistakenly focus on the family members actually running the company and overlook the family members in the shadows. New leadership hires in any company should always understand the power dynamics and information flows that apply, but in a family-run company, it is critical. The new hire should be aware of the family members who carry the same last name and those with family status but not blood relatives (spouses, in-laws, etc.). Astute leaders treat everyone with the appropriate respect, but within the family dynamic, it’s critical that the new leader be especially aware of anyone with special access to the boss. That’s not to imply those should be accorded any special degree of respect but to be aware that those family members in the shadows can sometimes wield more influence than those in the formal org chart.
Hierarchy and Power Dynamics: The chain of command for the new hire is crucial in any organization, but especially so in a family-run business. The chain of command should be clearly defined along with the decision-making hierarchy to avoid confusion and potential conflict. Ensure the new hire has the authority to make decisions within their designated scope.
Balancing Family and Professional Relationships: Establish boundaries between family and business interactions to maintain professionalism and avoid nepotism.
2) Communication and Transparency
Open Communication: Encourage open and transparent communication to address concerns, expectations, and potential conflicts early on.
Family Meetings: Schedule regular family meetings to discuss business matters, ensuring that everyone is informed and aligned on key decisions.
3) Cultural Fit and Values Alignment
Aligning Values: Ensure the new executive shares the family business’s values, vision, and long-term goals to maintain cohesion and a unified direction.
Understanding Company Culture: Ensure the newly hired executive is familiar with the family business culture to include any traditions, rituals, or informal practices. The interview process doesn’t always allow the appropriate attention to this so don’t underestimate the importance of addressing it during the onboarding process.
4) Succession Planning
Clarity in Succession Plans: If the executive is being considered for a leadership role, ensure the succession plan is clear, properly communicated, and agreed upon by all relevant family members. Given the complexity of succession planning, it’s important to note this topic will elicit a range of questions during the candidate interview process. Family members should expect that candidates for leadership will want to understand the family’s current status and their thoughts on succession planning. While many of these questions may be a work in progress, a competent leadership candidate will likely want to know how old the principal(s) / owners are and their retirement plans. Will there be a family member “waiting in the wings” to take over? Are there more than one family member vying for the top spot? Has there been any due diligence on potentially selling to a strategic buyer or private equity and if so what is the horizon for that? If any of these answers are yes, both sides will want to explore this topic in greater depth.
Assessing Readiness of Key Family-members: Many family-run organizations lack a formal training and development program. If key family members are marked for succession to company leadership, it’s important that their readiness to do so be objectively assessed and any opportunities for development be noted. Competent external leadership will have an expectation that they may need to mentor family members identified for leadership succession but may also have reservations about taking direction from family members lacking in the requisite knowledge and experience. Competent leaders will also have an expectation that their experience and expertise is not held hostage by political, familial or emotional dynamics related to the family ownership.
Development Opportunities: Provide opportunities for the executive to understand the family business’s history, values, and future aspirations. Consider the impact of developing family relationships and how they may impact the new hire’s runway for development and upward mobility. Will any of this impact longer term retention efforts?
5) Performance Evaluation
Fair Evaluation: Establish a fair and objective performance evaluation system to measure the executive’s success, focusing on key performance indicators (KPIs) and results.
Separating Personal and Professional Feedback: Ensure that feedback is given in a professional context, separating personal relationships from professional expectations.
6) Adapting to Change
Resilience and Flexibility: Family-run businesses can be resistant to change. Help the executive navigate and lead change initiatives with sensitivity, considering family members’ potential resistance.
Introduction Period: Allow for an initial adjustment period where the executive can gradually learn about the business and its dynamics.
7) Professional Development
Training and Development: Support the executive’s professional growth by providing opportunities for training and development. Don’t overlook the possible retention benefits to using certain development programs as an extension of your employee benefit program.
Mentoring and Support: Assign a mentor or advisor within the family or business to help the new executive acclimate to the unique environment. Before doing so, consider how well-aligned the mentor or advisor is in terms of experience and accomplishments against those of the executive.
8) Conflict Resolution
Establishing Conflict Resolution Processes: Clearly define processes for addressing conflicts to prevent personal issues from affecting the business negatively.
Mediation: Given the sensitivity associated with the family dynamic, consider the use of external mediators or advisors to handle disputes impartially.
9) Legal and Governance Structure
Documented Agreements: Ensure that roles, responsibilities, and expectations are documented in legal agreements to prevent misunderstandings.
Clear Governance Structure: Define a clear governance structure, including decision-making processes, to avoid ambiguity.
10) Employee Relations
Treating All Employees Fairly: Reinforce a culture of fairness and equality to ensure that non-family employees feel valued and are treated equitably.
Avoiding Favoritism: Be conscious of the potential for perceived favoritism and establish controls and policies that will mitigate the risk of perceived favoritism toward family members in the workplace.
By proactively addressing these issues, family-run businesses can get newly hired executives up and running faster and more effectively while also maintaining a healthy balance between family relationships, professional responsibilities and the company’s welfare and viability.
Warren Carter is an accomplished executive search consultant with extensive experience supporting family-run organizations seeking key leadership talent. His experience includes providing advice and counsel with succession planning, talent mapping, the executive search process and the onboarding and integration of new leadership hires. Warren serves as the President of The ExeQfind Group and can be reached at:
- 770-375-0784 (office)
- 619-921-1795 (mobile)
