How to advise on business leadership roles: a balancing act

Listen to Harry Martin, a Family Business Advisor and Family Office Expert describe how an Advisor can help in defining the next leadership team. In a family business, it is often difficult to make a decision which benefits both the business and the family. In this case it is beneficial to bring in an outside perspective who is qualified to make an objective decision.

What we’re talking about is the blend, the mixture of two forces which don’t necessarily go together. Family, with all the emotions that exist between the members, and the survival of a company, which in this competitive world, needs somebody who can really run it. And those are the two countervailing issues at work all the time. I was involved in a case where the real issue was could the son run the company. And that was a terribly charged issue. Within that case, both parents ambivalent between their filial feelings, and wondering if the son could do it. I helped them in a long campaign to help the son understand that it wouldn’t be best for him or the company to succeed. We were helped because he had a hobby which he liked very much, ok, an active hobby, a physical hobby. In the company, we had a successor who might not have been the ideal outside candidate we could have recruited but was trusted by the family, was an able enough person, and so that happened but only because we could create a Vice-Chairman. So we had blend here of family interest of being fair to the son, the parents not being hurt, the son not being hurt, the company not being hurt. But we had the conditions that allowed us to solve it. We had a son with outside interests who was reasonable enough so finally he understood. He was able to have some role in the company. We had a number of circumstances allowing everyone to save their pride and have it work. But there are other cases where I was involved where the family had to in effect fire the son who was CEO, who’d been the CEO for some time. That was a very painful, difficult circumstance. Most of these cases, they end up in either keeping the child in the leadership role too long, driving the able management out therefore subjecting the company to failure. Or they make the change with a great rupture with the child. But most of the cases the family has great difficulty in not putting the son who believes he’s the heir apparent in the role.