After hosting a panel discussion with some high profile family and non-family business leaders at our East Midlands Family Business Conference in July, James Pinchbeck, Marketing Partner at Streets Chartered Accountants talks about the pro’s and con’s of making non-family senior level appointments for family businesses.

Here’s some of his thoughts:

“It is not untypical for family businesses to never consider or even resist the idea of recruiting or engaging a non family member to run or take up a senior role in the business. This may be because it is felt they are not required, family know best or reticence around letting others into the inner circle.  The cost may also be a barrier, as well as even knowing how to go about recruiting someone.

However, there is a growing trend for many successful family businesses to take on non family members in roles including Managing Director, Non-Exec Director and other senior or board positions. The key drivers for such appointments seem to be around aspects such as succession issues and a lack of family members to take on the roles, recognition that perhaps there might be a skills gap in the business and also the need to bring new ideas and a new level of professionalism to the business.

Certainly, a non family member comes without the emotional baggage of a family member, often with the benefit of a more commercially focused mindset. The challenge is ensuring they embrace or at least are empathetic to the unique set of values often associated with running a family business.  The need to bring about change and manage resistance can be a real balancing act – there is a risk that whilst change or new procedures need to take place, it is not always welcome. A good appointment though should be able to charter the stormy waters.

It can be the case that an external appointment could cost or earn more than those family members working in the business.  The challenge is ensuring that expectations and the financial returns around such spend is understood by all parties.

As to why a non family member would want to work for a family business, the reasons are often overlooked or poorly understood. It can be much more rewarding than one might think. Family businesses often have an exceptional sense of pride in what they do or produce, have a focus on long term sustainability as opposed short term financial gains and have a focus on employer wellbeing and all being a part of the ‘family’. It is perhaps not an environment for the more corporate player, charged with keeping investors in the City happy.

Recruiting the right individual, as with any employee, can be a challenge. There is often the need for clarity about the role and a true understanding around expectations, reporting and the outcomes to be delivered. The old adage about choosing your business partner like you might do your spouse might be a good one to heed. Seeking the support of fellow professional advisers and guidance from peers and those running other family businesses could be worthwhile too.  The value and difference though that a non family member can make to a family business certainly outweighs the challenges or potential objections to recruiting one”.

James Pinchbeck – Marketing Partner, Streets Chartered Accountants. 

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