Search Challenge: Hiring for a Family Owned Business

Dog-the-bounty-hunterMost of the work we do in our executive search practice is for small cap, privately held, venture backed and a few large cap publicly traded companies. Having worked in all of those types of companies allows us to identify with some of the dynamics of some of the clients we conduct search assignments for. And then there is a different model altogether: a family owned business. This type of search is fraught with challenges. I have only done one search like this – and I’m not sure I’m all that excited about doing another one… Not an easy search.

There are real issues in working in a family owned business that candidates MUST consider before saying “I DO.”

In The Family Circle: I don’t care how good you are as an employee, you will never be part of the family. Blood is always thicker, and if you are outside of the family circle of trust, you will always have a distinct disadvantage when it comes to critical decisions, strategy and in doling out raises, perks and a whole host of benefits bestowed to siblings, parents, kids etc. That will never change. Secret family meetings are the order of the day. No punches here – it just happens over dinner and at other “family gatherings” when somebody in the family wants to “talk shop”.

Favoritism: When an employee has a disagreement or challenges a family member, it’s very hard for the employee to win. OK – never (did I just say that?). This sort of frustration can fester and sooner or later the employee will “GET IT” and bail. Not a great outcome. Employees may find they are compromising their belief or value system to try to make things work out with a family member. In a dual between an employee and a family member there is only one winner. Need a hint on who to put your money on in that fight?

Upward Mobility: In many family-owned businesses the succession plan usually includes a family member taking the helm one day - that’s just the way it is. If an employee looks out on his/her career horizon they need not look too far. For those employees without tons of ambition, this could be the ideal platform to a career of mediocrity. That’s not a good outcome for the business. See my point? The employee’s future career progression should be fairly clear – on day one. The family has big plans and your candidate may not be a part of it.

Compensation: Not sure we need to cover this subject except to say that once again the family member wins and the employee outside the family circle – well, that employee loses. Every time. This becomes very problematic when you are sourcing candidates and explaining the opportunity. I’ve always found that most candidates are pretty savvy and see working for a family owned business as one that will be challenging regarding the economics.

In the end, I know there are lots of great career opportunities working for a family-owned business. Especially in today’s job market. I just have serious reservations about engaging in an executive level search unless there are unique circumstances with the family dynamics, strategy and exit plan. Eyes wide open. Always!

FOT Background Check

Tim Tolan is a partner at Sanford Rose Associates and specializes in Executive Search in Healthcare IT. He's a closer, and you really don't want to call him unless you're ready to bring out the bazooka to bag some big game. When I started Fistful, I checked four references on Tim - his wife, his kids, his pastor and a client. The references were great, even if it sounded like they were reading from a sheet of paper. I just chalked that up to them being "detail oriented" in their feedback....

4 Comments

  1. John Jorgensen says:

    Tim, good post. As someone who has worked for family owned businesses, I can tell you that there are many landmines that candidates need to be aware of, especially the family politics. The leaders are not always qualified to lead the company from the current position to the future. You almost need a crystal ball to see if that will happen at times. Ask all the questions you need to see if that will happen. Working for a family owned company can be a rewarding experience….if it is the right family.

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  2. Tim Tolan says:

    The term “Landmine” is a good way to explain the situation. The challenges of working in a family owned business exist daily – but you can’t always see them until they blow up in your face! Leadership in many of these companies is a “right of passage” without having the qualifications! Scary!!!
    Thanks for your comment John.

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  3. I think you are generalising family owned business here. Just like there is no ‘one sieze fits all start-up’, there is no one type multinational, there is no one-size fits all family owned business.
    Sure, usually there is a upward mobility barriere, although I’ve seen family owned business where all the family decided that it was better for the business to just own it and not be involved anymore (even though there were 8 kids potentially taking it over).
    There are many rewards too. In my (distant) family we have a company where it’s now 4th generation, where some employees have ‘survived’ 3 of them. They have been working there for 60 or so years. Imagine, in this day and age…
    So yes, the things you describe can be there, but not always. I guess just like with every normal company it depends on the type of leaders and management.

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  4. Tim Tolan says:

    Bas:
    Thanks for your comment. As I stated in my post, conducting a senior level search assignment for a family owned business is a tough assignment. The dynamics of the family, strategy and other factors all come into play here. I never want to set a candidate up to fail – and without the right situation it could happen. Eyes wide open.

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