20 Feb Attracting and Retaining Non-Family Executives
Running a successful family business requires broad experience and a diversity of talents – talents that not even the most capable families can guarantee generation after generation. In addition, qualified on family executives can help a family business grow by contributing fresh ideas and high professional standards. Thus, all growing family businesses may at some point desire to attract top talent from outside of the family. Here are some best practices for attracting and retaining non-family executives in your family business.
Develop family business employment policies. A clearly defined family business employment policy establishes standards and levels the playing field for family and non-family members. For example, entry into the family business should be based on objective guidelines consistent with the family mission and business strategy. Guidelines also should specify the education and outside experience needed by family members before they may enter the business. Finally, a thorough employment policy should define the standards for performance. Unfortunately, some family businesses don’t hold family employees accountable for their performance. Others expect family employees to “pay their dues” by working harder for less compensation than non-family employees. Neither situation is an effective practice. In a healthy family business, both family and non-family employees are held to minimum standards of performance, and are subject to the same promotion and termination standards.
Establish an objective compensation system. Compensation is another hot topic for family businesses, ranking second only to succession as a key concern. Best practices in family business compensation involve setting pay ranges around fair market value, and using a rational basis for determining total compensation. Unfair compensation practices such as overpaying family members, or compensating family members based on need, set the scene for conflict and mistrust among family and non-family executives alike.
Share information and involve key executives in planning. Family business owners, especially entrepreneurial founders, may tend to play their cards close to the vest. They may be protective of any information they view as “belonging” to the family. In contrast, in a healthy family business, open communication is the norm. The most successful family business leaders communicate mission, values, goals, successes and shortcomings with all members of the organization. They also involve key stakeholders, including non-family key executives, in planning for the future of the enterprise. When leaders share information, and involve others in planning and decision-making, the result is greater business creativity. Trust and commitment will grow as all members of the family enterprise are engaged in the process of moving the business forward.
All executives, whether employed by a family business or not, want a few key things: fair treatment, open communication, involvement in decision-making, and a chance to make a difference. The preceding best practices address these universal needs, and will help family businesses attract qualified executives and engage them in growing the business