Why family business needs non-family members

Why family business needs non-family members

At their core, family businesses are about family – most often established by an entrepreneur – the business is either run by more than one family member or destined to be passed down to the next generation.

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Why then do experts say that it’s important to have non-family members in leadership positions or sitting on the board of a family-run organisation? What vital role can they play in ensuring good governance?

While most family-run businesses keep family members at the helm, there are a number of reasons to bring in a non-family member to manage the daily running of the business or give advice on board matters.

Non-family members in leadership positions

This might happen if there are only a limited number of family members willing to work in the business, or if the next generation is not yet prepared to run the family business, or are focused on achieving their own career aspirations.

It also might happen if there are no suitable heirs to the business (lack of an established succession plan), or if family members are invested but do not possess the required business skills and expertise to ensure that the business will succeed.

In addition, good governance requires some level of diversity and flexibility and that might mean bringing in a non-family leader if the business requires it.

Ensuring good governance

Many family business owners might find that they have been doing things in the same way for too long and that there’s only one viewpoint or one collective ‘voice’ at play during major business decisions.

This is because the very elements that make up a strong family business – shared views, loyalty, history – can also sometimes act as a stumbling block to business growth and success. Thus, family businesses that choose to reach out to professionals outside the family circle can add value through wisdom, education, and a unique perspective.

The intended result? Ensure the growth and endurance of the business in competitive market spaces. There’s a fear among some family business owners (especially if they have started the business themselves) that non-family members will not care for the business with the same level of passion as a family member would.

Reasons to employ a non-family member

There’s also a misconception that non-family won’t understand or believe in the culture, commitments, and aspirations of the business. These fears can lead to the rejection of the non-family member, especially if they’re not sensitive to these fears upon entering the business. To do so, they must display a high level of cultural competence.

However, these fears are outweighed by the positive impact the right non-family leader can have on a business’ performance and future success. Along with their unique skill set, these non-family executives can bring a different perspective and fresh ideas to the table.

This is because, in many cases, they’re not hampered by the close personal relationships of family members. This means they can encourage a greater sense of professionalism and a healthy level of challenge and debate at key decision-making moments.

A strong family business

Skillful non-family leaders are capable of working with and navigating the interpersonal aspects of the family environment within business structures. They understand how each family member fits into an organisation and how best to achieve organisational goals while managing personal expectations.

This can also make them good coaches or mentors for younger family members who might struggle to learn from their parents in a business environment. If the relationship is a successful one, non-family leaders will eventually feel part of the family in terms of their position and career path.

This should result in acknowledgement, real authority, and the chance to grow professionally and financially, while helping the family business to live on into the future.

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