Buyer (well, non-family CEO!) beware…
So often I talk to non-family executives employed by family businesses who have recently left, or are considering leaving, a leadership role. It can be at their own instigation, the owner/s driving the decision, or the two mutually agreeing that it’s just not working out, but the end results are the same – disappointment at a career misstep, concern about how the “failure” might impact on their reputation, the financial setback involved, and the daunting task ahead to secure a new position.
Those conversations often reveal that the executive, particularly if they have not worked in a family business previously, has been blindsided by the issues that have led to the relationship unravelling. Just as often, those issues are ones that could have been uncovered by some due diligence that should have been part of the recruitment process.
If you are considering joining a family business in a senior capacity, I suggest you investigate the following at a minimum:
Have the owners separated owning the business from running the business in their minds? The simplest evidence as to whether this has happened is the existence of proper business governance. Does a board containing independent, non-executive directors exist? Is there at least an Advisory Board in place, populated by independent (i.e. not the owner’s accountant, lawyer or other consultants being paid by the business – they are not independent) Advisors.
Have you met, separately to the formal interview process, with the independent directors, and one-on-one with each of the family members on the Board?
Is/are there particular “family leader/s”? Do you understand their vision for the family, and how their vision for the business ties to their vision for the family (they are two separate things)?
Do you understand the family leader/s’ values? Do your values align to theirs?
Can the board articulate a clear, agreed strategy for the business?
Is there a clearly-defined set of “success criteria” for the role? Is it clear “what success looks like”?
Are there influential family members not on the Board (e.g. retired founders or members of the next generation)? Have you met with them? Are they clear on what the success criteria for the role are? Do they agree with the role being recruited at all?
No amount of due diligence can mitigate every potential risk, but these are crucial steps in my view. Executives and business owners alike should ignore them at their peril.
