The war for talent is fiercer than ever. Companies everywhere are vying to attract and retain the most skilled employees, and as a family business leader, you're competing with more giant, more resource-rich corporations. These big players often offer higher salaries, more benefits, and greater career growth opportunities. However, your family business possesses unique strengths that, if leveraged correctly, can turn these challenges into golden opportunities.
Assessing Your Competitive Edge
First, it's essential to assess what sets your family business apart. Let's be honest: there are many misconceptions about family businesses, like limited growth opportunities or outdated practices. These misconceptions can scare off great talent. But you can flip the script by understanding and promoting your unique strengths.
One significant advantage is that your family very likely has sincere compassion for the people who work for your company. You genuinely care for your people. Your company was likely built on deep-rooted values and a strong sense of mission. This fosters a supportive and inclusive work environment, which can be a significant draw for candidates seeking meaningful and fulfilling work.
Leveraging Unique Strengths
Your family business's long-term vision is another key strength. Unlike larger corporations that may prioritize short-term gains, and as a result be unreliable employers, a family businesses often focus on long-term growth and sustainability. This commitment to the long term can be highly attractive to candidates who are looking for stability and a place to grow over time.
Personal relationships also play a huge role. The close-knit nature of family businesses promotes a sense of community and personalized attention. This is something many large corporations simply can't offer.
Addressing Common Concerns
At Stranberg, when helping families recruit C-Suite executives, it is common to hear family owners make concerning statements such as:
"I don't want other people telling me what to do with my business.”
"How can I trust the ‘new guy’?"
These concerns reflect a broader issue in family businesses: for non-family people to succeed in senior roles at a family business, the family needs to be willing to let non-family people make decisions and establish a method that allows a non-family person to earn trust.
Non-family executives also have to attract non-family executives (NFEs), so it's crucial to present an opportunity that entices quality executives. NFEs are seasoned professionals who know what a well-run business looks like. They will conduct thorough due diligence, ask to sign an NDA, review your books, and seek to understand your strategy and culture. They will want clarity on what success looks like from the owner's perspective, how it will be managed, and what the compensation and benefits package entails.
Defining Your Business Culture
Culture isn't about family ideology or having a ping pong table in the break room. Culture is how your people get work done.
For example, a Stranberg client experiencing unprecedented growth, hired a strategic Head of HR from Caterpillar. In Peoria, IL, at Caterpillar’s headquarters at the time, Human Resources had its own campus with multiple buildings. The HR exec this family business hired came from a culture where everything had a standard operating procedure, and any major decision was made slowly through a corporate bureaucracy. However, in the family business, HR was a department with three employees. There were no formalized processes, and ideas and decisions were made on the spot.
The HR exec did extremely well at this family’s company, but it was incredibly difficult at first for her and the family due to the changes in how the family and the new executive got their work done.
Many executive hires will fail in family companies because the culture of the family and the new hire are mismatched. At Stranberg, we advise our clients to reflect on how they get work done so that they can select and hire new people who can be successful on day one.
Compensation vs. Opportunity
While compensation is vital, it's too narrow to focus solely on salary and benefits. Instead, think in terms of "Opportunity." Compensation is ultimately math. It’s transactional. Great executives must ensure their compensation expectations are met, but they won’t take a job at your company for money alone. Beyond the dollar, great executives are interested in ‘Opportunity.’
This can mean an opportunity to:
take a business from good to great.
be a part of a business legacy.
coach and mentor.
work with a business that aligns with their values and ideals.
many other things.
To determine what types of opportunities your family business can offer, ask yourself: What does your business support outside of its clients? What community do you serve? Great candidates will work with you if they believe they will be taken care of, like who you are, believe in your business, and feel they can succeed in their role.
Strategy, Family Talent, and Governance
Family businesses need clear strategic direction, well-defined family roles within the business, and clarity on management structures to succeed with NFEs.
Strategy: Owners need to communicate their vision for the business clearly. Whether the business is seen as an asset to manage and deliver shareholder value, a means to serve the community or a legacy, this vision must guide decision-making and strategic planning. This strategy defines the NFE’s position and qualifications and how you measure their success.
Family Talent: Develop a family talent plan that includes rules for how family members join the business and how their careers progress. Educate family members on their influence and ensure buy-in from all stakeholders before making executive hires or promotions.
Governance: A governance system ensures that the business operates in line with ownership interests. Decentralized decision authority, independent directors, and a compensation committee are key elements that protect NFEs from family dynamics and ensure fair, market-based compensation.
Conclusion
Attracting and retaining NFEs in a family business requires a strategic approach beyond traditional recruitment. By understanding and addressing the unique challenges and concerns of NFEs, family businesses can create an environment where top-tier executives can thrive. This involves defining a clear strategic vision, developing a family talent plan, and implementing robust governance structures. With these elements in place, family businesses can successfully attract and retain the executives they need to drive their business forward.
