Top 5 Competencies for a Family-Business Leader
- Own What You Know and What
You Don’t
An
important competency for a leader is to own what you
know, but also to
recognize
that there are others
who may know more than you, or can advise you relative
to the handling of a difficult problem.
Everyone comes to the table with a different
set of experiences, education, specialization, and
knowledge. Building a truly successful and growing
family business depends upon a healthy realization of
where your knowledge base lies and the ability to reach
out to other family or staff members who have particular
expertise in other areas that are crucial to
organization.
It is a
well known that a good manager recognizes his strengths’
and more importantly knows his weaknesses. Realizing
this and placing another person in a position of
responsibility and authority with the strengths that
counter balance the weaknesses of the CEO is very
important to help a business grow and prosper. Many
times this position will be filled with a family member
who may not be qualified. This is a prescription for
disaster. Always place the best person in the job
irrespective of the fact they are a family member or
not.
- Recognize tough decisions as
opportunities
Some
decisions are cut and dry – but many of them involve
making tough decisions relative to staffing, or cutting
expenses, or selecting the right strategic direction,
that present real opportunity for change or growth.
Sometimes in these situations, it’s obvious what the
right move is – but it’s a hard one: letting go of a
family member who isn’t pulling their weight, changing a
supplier that has been with the business for many years,
canceling a product line which just isn’t profitable any
more, even though it has been a staple of the company in
the past. The tough decision is often the doorway to
improved profits, growth, new market opportunities, or
increased productivity. Weighing the upside of a tough
decision with the potential fall-out it represents is
critical in managing our own tendency to avoid the
difficult or painful choice.
I had a
very loyal bookkeeper for many years. This person was
totally dedicated to me and the company. As the company
grew we required a person with a greater skill set than
this person could provide. As painful as it was, and I
can assure you it was painful, this person was asked to
leave. The first replacement turned out to not be much
better! But learning from our mistakes, we found a
highly qualified individual that paid dividends for many
years. The real question is why I waited so long!?
- Focus on the “who” of your
team
Surround
yourself with good people and a mix of family &
non-family by figuring out who you need before
you figure out “what” you need. The right people in
place, aligned with company values, goals, objectives,
and ethics will take you where you need to go. Settling
for the wrong person, be it a family member, or a staff
member, holds back both the company and the individual.
It isn’t doing any one a favor and it’s negatively
impacting your company’s progress. Often we focus on the
practicality of “what” a person brings to the company in
experience, without adequate focus on who they are, how
they work, communicate, and interact with others. A
solid team is built from selecting and refining your
staff so that the “who” and the “what” contribute
equally in getting the job done.
I had a
person in a very senior position in my company who was
not a "team player". This person was more concerned
about his own welfare rather than that of the "team" and
by extension, the company. This was causing a great
deal of tension amongst the rest of my management team.
This person was ultimately replaced to the relief of
everyone. The increase in spirit and moral of my team
was palpable! Again, I asked myself, why did I wait so
long?
- Risk is a requirement
Every
organization has a risk threshold. How willing is the
company and its owners to try new things or move into
new areas? It depends upon the dynamics of the family,
the way the organization is operating, the current
profitability, and whether the right staffing is in
place. Does the company work in a vacuum? Advisory
boards are often an excellent way of getting outside
perspective from people in the industry that have had
similar experiences and can look dispassionately at what
opportunities and risks are really in play. Whether a
company’s risk tolerance is high or low – it comes with
the territory. The saying goes: low risk, low reward.
Understanding what you give up in exchange for security
can be more important than just focusing on the
potential for negative outcomes.
My
partner and I were retained to create a board of
advisors for a client who owned a very substantial
company. The thought of bringing in a group of
"strangers" was a big risk for the client. Taking on a
board of advisors meant sharing financial and other
business related information – something the client had
never done before. After some stops and starts, the CEO
became more comfortable with the board and visa versa.
Soon the CEO was able to listen to other points of view
and see his company in a different way. He became
empowered to take calculated risks that might never have
happened without the input of the board of advisors.
- Create a forum for family
versus business
All of us
bring our own baggage into work every day in one way or
another. When running a family business, the
opportunity for family issues to impact the company,
staff, customers and suppliers is very high. Companies
that are not able to separate time for discussion of
family-related issues versus business issues run a very
real risk of dragging the business down. While it may
seem at times that the family and the business overlap
frequently, is that because emotions are involved, or
there is a true reason for the two to be intertwined in
a decision or problem situation? Having a forum for each
helps net out that conflict and reduces the amount of
time spent churning the business because of non-business
reasons.
Family
issues are usually more about emotion than anything
else. When these types of issues rear their ugly heads,
the best plan of attack is to bring in a disinterested
third party. This should be a person with no personal
ties to any family member – allowing the situation to
potentially be analyzed more dispassionately.
As an
example, a client was having a staffing problem - some
of his best people were leaving for no apparent reason.
Out of frustration, the CEO brought in a disinterested
third party to interview the remaining employees. It
was discovered that a family member was causing such
turmoil within the company that it was decided that this
person had to leave. The ability of the “outsider” to
speak the truth about what was causing the turn-over
made the difference in resolving the problem. The
predictable result was a much happier working
environment, and the exodus of good people ceased
immediately.
- Listen to the message without
bias
How often
do we factor in “who” is telling us something before we
even adequately listen to what they are telling us. In
a family owned business this can run the gamut of only
listening to other family members, to believing only one
trusted advisor – ignoring capable staff members. We all
have an inner filter that automatically colors much of
what we take in. A strong leader focuses on the content
of what is being said, rather than internally focusing
or ignoring based on who the messenger is. This is an
example where the “what” is more important to focus on
first rather than the “who.” Do the ideas of line
staff weigh in fairly versus the input of family
members? Creating a company of “haves” and “have-nots”
can sabotage innovation, growth and change when your
company needs it most. Killing the messenger, rather
than listening to the message, is one of the most
foolhardy things a CEO can do. Irrespective of where
the message comes from listen to the message first and
then consider its source!
By
Jeffrey Ross, Managing Partner, RossFialkow Capital
Partners
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