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A Non-Family Exec Worries About the Future

“When I look into my future, I can’t see staying with this business.” The speaker was a 40-ish, key non-family executive in a rapidly growing family-owned business. “It is increasingly clear to me that this organization won’t do what needs to be done for the business. There’s too much family, and too many decisions that need to be made are not being made because they would upset the family. Then I get caught in the middle.”

“While my pay is good,” she continued, “I’m building value here that is not being recognized. I’d like to be recognized for my past contributions as well as for the value I will build in the future. There are so many opportunities out there today, for us to build this business....

“If I believed we would tackle the problems that I see, I’d love to stay. But if we don’t do what we need to do, with the way margins are shrinking, we’re dead anyway. Two of our top six managers need to be replaced — including the boss’s nephew...but he’s afraid of hurting his sister. The other guy has been here longer than anyone else, but he’s retired on the job. We’re paying him three times what he’s worth and we really need the executive talent that his position should provide. We need to hold ourselves more accountable throughout the company. If we can’t, we’re toast. And if that happens, there’s no reason to hang around.”

Key non-family executives in young, growing family firms experience many of the same family-business paradoxes experienced by family members. Questions inevitably arise in their minds. Is my commitment to this business appropriate? Will my contributions be recognized? What roles will the next generation play? Will business standards be applied to business matters or will non-business “family matters” drive business decisions? What is the true potential of this organization and what is my potential within it?

At times of generational transition, just when the family is struggling for answers of its own, the importance of such questions is magnified for the non-family executive. And unfortunately, that such questions arise at this sensitive time can be misinterpreted by family members as evidence of inadequate loyalty. A very unnecessary vicious cycle can be set in motion causing great harm to all parties -- and to the business.

If you have non-family executives who you believe are important to your family business, be sure to let them know in word, deed and rewards. If you don’t wish for them to own shares, reward them with phantom stock or in other ways that will help them to think, act and feel like owners. Involve them in planning the future leadership structure of the company, but don’t use them to carry uncomfortable messages to the next generation — make sure they aren’t stuck in the middle of family disputes.

Non-family executives must consider their own families’ best interests. It is up to you to convince them that their families’ best interests and the greatest rewards lie in serving your family business. Family business owners who expect non-family key people to exhibit blind loyalty are frequently blind-sided.

 


Best Practices for Managing Key Non-Family Executives

  1. Have a family employment policy and share it with your key non-family employees.
  2. Have a compensation policy that applies to all employees
  3. Create a compensation system that helps non-family executives think, act and feel like owners.
  4. Share complete information with key non-family executives.
  5. Involve key non-family executives in strategic planning and decisions.
  6. Communicate clearly through actions, decisions and words the family business’ mission, goals and values to and with non-family employees.
  7. Communicate family succession plans with non-family key executives.
 

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