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51


FAMILY BUSINESS:


Penny Webbon the particular qualities and attributes required of a non-family leader in a family firm.


We all know it is lonely at the top, but there are peculiar issues to be addressed by those who lead family businesses. One of the most frequent issues I am asked to address involves that grey and dangerous area where family ties and interests pull in one direction and those of the business the other. Should one put the family first or the business first, and what can be done to align the two?


Many family firms are taking the very sensible step of bringing in a CEO or chairman from outside. It is an excellent idea, but for the imported leader, the challenges are much more complex than they are in a conventional business, requiring extra levels of diplomacy and self-confidence.


So if you are a non-family leader, or are considering an invitation to join a family firm, here are a few basic thoughts. They are not comprehensive, but will hopefully provoke your thinking.


What do you want to be remembered for and how are you going to achieve this? If making money in the short-term whilst controlling all decisions, then family firms are not likely to be for you. If you are used to playing office politics and being incentivised on results only, you will find yourself at a disadvantage when it comes to managing counter-strategic decisions or the fact


AN OUTSIDER’S


that decisions taken at the board table can be renounced by family shareholders over lunch.


You need to invest considerable time in understanding the degree of growth, profitability, risk and liquidity that the family wants to see in the business. This can be painstaking, but not all of your shareholders will be present at a board meeting. You will need to work off-line and build personal relationships of trust. Also be prepared to mentor family members. You may not necessarily rate one or more of them but they are part of the parameters within which you must work.


Trust and the ability to build it is the fundamental building block of good governance. Don’t be afraid to tell family shareholders regularly how well the business is doing. Give them the good, the bad and the ugly on a quarterly basis. You cannot communicate enough in a family firm. Failure to do so will leave you in a vulnerable position from which it may not be possible to recover.


Just because a family firm has achieved success on the back of a strategy that has lasted 50 years, don’t be afraid to ask ‘what if?’ Challenge constructively, push the boundaries of accepted wisdom. Test the acceptance of good performance, particularly around the board table.


Take time to meet all stakeholders, be they children, ex-NED’s, spouses,


family members who may have sold their stakes in the family firm. Understand you are coming into a firm with a substantial legacy and demonstrate respect for this legacy. All family firms began in the mind of one or two entrepreneurs who no doubt have suffered the vicissitudes of economic reality. Learn from them.


Once you have facilitated dialogue, be prepared to identify priorities and hold others to account, including family members. Inactivity and leadership are not good bedfellows, particularly in family firms. Do not confuse long-term thinking with ‘we can take our time’.


Never take sides with one particular family individual or branch of the family. In so doing, you will never lose your neutrality. You can learn to influence others towards a correct way of thinking through continual interaction with shareholders but the minute you take sides, your trust will be lost.


Do not get the idea that being a non- family leader within a family firm is not fulfilling; quite the contrary. As a CEO and Chair of a very large family firm has told us, you can become a trusted advisor, you can help wealth to be passed onto future generations, you can support your society and employees in far-reaching ways and you can be associated with brands of enormous significance and respect. Moreover, you can use your emotional abilities as well as commercial abilities and find extraordinary fulfilment in your role.


BF


GUIDE


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