A growing family business passes a significant milestone when it begins to fill key leadership positions with outside executives. In many established firms, non-family managers (NFMs) are indispensable to the business effort and enjoy equal standing with family managers.
An intergenerational business transfer will ultimately test the chemistry between family and non-family systems. If managed properly, however, the business will emerge stronger and more valuable.
If you are approaching a leadership change that will involve NFMs, consider the following truths.
You Need Them as Much as They Need You
Non-family managers can play an integral role in leadership succession (1). Quite often, they perform multiple functions that assist in the smooth transfer of leadership and control.
They might provide insight to help an owner identify and evaluate the most capable future leaders. They often serve as mentors to the designated successors. In some instances, they provide interim leadership to help bridge the experience gap between the older and younger generations. A NFM may even prove the best candidate for leadership.
They may perform other roles as well, including informal mediator between rival successors and counselor to the owner. Some of these relationships are in place long before the succession process begins.
Some NFMs Can Sabotage Your Transfer Plan
It is normal for long-standing NFMs to tie their career hopes, financial security and personal interests to the family business. You should expect even the most loyal executive to consider these in light of the anticipated leadership change.
But this natural focus turns dark when NFMs work to protect their position in the emerging structure by manipulating people, processes and information. Some companies have even fallen victim to a NFM who impeded the transition with intentions of leaving the company to start a competing firm.
A NFM's behavior usually isn't quite so Machiavellian. Perhaps he lacks confidence in the new leader, fears losing his position, or doesn't feel sufficiently rewarded for his long-term contribution to the organization.
You can minimize the possibility of resulting conflict in a number of ways. Non-family managers can be included in planning the transition. Family leaders can share the strategic and operation details of succession and explain their plans for a NFM in the new system. It may also be wise to restructure your NFM compensation package to better reflect an executive's value to the firm.
Preparation Time is Critical for Both Family and Non-Family Managers
If you have chosen a successor or have decided to prepare someone for assuming a key leadership position, communicate this to other key managers as soon as possible. If you intend to choose family members to lead the company, give NFMs ample time to accept your decision. Conversely, the members of your immediate and extended family must be prepared to embrace your decision to promote a NFM to the top position. Again, be specific and up-front about your plans.
Fairness Can Minimize Conflict
Show NFMs the same commitment, respect and neutrality offered to family members. Let family employees know that you will support NFMs and defend them when necessary. This message is particularly crucial during transition, as organizational uncertainty is a breeding ground for misunderstanding, rumor and discontent.
Demonstrate your appreciation for your NFM's commitment and service. Verbalize your confidence in his or her skills. The resulting goodwill can help strengthen the organization and prepare it for change.