SUCCESSFULLY RECRUITING THE FIRST OUTSIDE DIRECTOR TO A FAMILY BUSINESS

It is natural for family shareholders to have complete operational control of small and medium-sized companies in their early stages of development.

Fairly quickly, success and ambition lead to expansion of the business. To remain successful, the company must increase the size of its leadership team and reorganize the management structure.

It is often the case that shareholders cannot find the right CEO to lead them through this new phase within the family. Having failed to find someone known to them, they turn to a firm of executive search consultants. The latter must provide strong support, empathy, expertise and commitment over a period of time. It is not straightforward to appoint the first CEO from outside the family.

It requires significant change from a psychological perspective.  Shareholders in family businesses are looking for Directors who share their view of the company, who – like them – believe in its long-term viability, who also love a hands-on approach, and have a deep respect for their colleagues. This need to find someone who shares their DNA sets them apart from other businesses. Culture and values are essential criteria in the description of the Director’s role.

This means that candidates must be analyzed thoroughly, from their personal maturity to their behavior and personality at work and the coherency of their career path. It also means the potential Director must, like the family members, live close to the business. It is natural to check whether the candidate’s family agrees to make a permanent move to the region. Conversations with the spouse as well as an understanding of the children’s situations also play an important role.

As well as human aspects, the CEO must offer significant professional expertise, in terms of the business as well as management practices. To ensure a business enjoys a further phase of growth, it may be looking for: a CEO to consolidate and structure the company; a CFO to put in place control and steering systems; a Sales and Marketing Director to drive international development, etc.

We assess a series of qualities such as the candidate’s prior achievements and the exact reason for their change of company, and we take appropriate references to help us ensure we pick the right person for the role.  This work depends on a consulting process built on seniority as well as expertise in the relevant business sectors and situations.

But a successful recruitment for a family-owned SME also involves the careful preparation of family members for this new stage.

To show the company at its best to potential new Directors, we have to assess the consistency and definition of the medium-term development plan, the support of family members for the creation of a strong management committee that includes external, independent, committed and supportive Directors. Lastly, shareholders must be questioned about potential risks that lie ahead, as well as the current and future role of family members in the business and its governance.

Every aspect of this approach is essential in order to recruit the first outside Director to a family business. On our part, this requires very close involvement that is tailored to the client, and long-lasting. It is our passion.  We are very proud of the recognition we have among our clients, built up over many years.