Some business families have learned how to work effectively with non-family executives (NFEs). Others struggle to find the right way to give a non-family executive management responsibility.  It is not an easy decision, especially the first time.

Fears of giving up control, trusting an outsider with the confidential information of the business, and an inability to find an outsider who will fit the family business culture and respect the family’s values all pose hurdles. But to fully develop their businesses, business-owning families find it necessary to go outside.  Reasons include lack of management and leadership talents within the family, a large gap between the retiring  family CEO and the next generation, and the need for an outsider to move the business toward greater professionalism.

The success or failure of NFEs hinges on their ability to develop over time a constructive working relationship over time with family executives and the board. Expertise alone will not create a good working relationship.

When a family CEO shares power and responsibility with NFEs, the situation can be particularly complex. In these cases, both the family CEO and the NFE must commit to a “marriage of reason with shared passion.” As in a good marriage, each must respect and challenge the other, maintaining the spark necessary to fuel the relationship. The sharing of similar life values and “cultural fit” is essential.   Most important is a developing relationship with a willingness to collaborate, balance power and continuously sharpen each other. They must form a learning team with strong commitment to the business and their relationship. Both the NFEs and the family CEO must recognize that the relationship takes time and dedication.

We interviewed a number of NFEs and found that the development of constructive working relationships creates personal and business challenges. On the personal level, NFEs report that their major challenge is to know their CEO inside out. This helps them understand his thinking and actions and informs them how they can be most effective. As one NFE said: “I knew he was a dominant man, so if we disagreed, he was the boss and that was all right with me. But whatever the disagreement, I always felt respected by him.” Clearly this NFE felt influential in the company and used a more subtle strategy to get his views accepted. Another NFE said about his CEO: “He needed me to convince him or almost force him to undo certain decisions he had made impulsively.” This executive described himself and his CEO as dominant, but they were able to constructively work together on important decisions.

On the business level, each of the NFEs we interviewed felt respected and believed that they influenced the strategy and important business decisions. Money was not what drove them to enter family business. As one of the NFEs said: “I sensed the family’s passion and commitment for the business, it’s not all about money here. That’s what I like.” The business’ values strongly resonated with his own.  Another NFE mentioned: “I feel myself as the caretaker of the soul in the business together with the family.”  Strongly committed to his employer, he identified with the business’ drive and spirit. 

NFEs described themselves as informal leaders and business stewards, internal strategic or operational management consultants, or shadow entrepreneurs. They make substantial contributions to strategic decisions and the implementation of strategy.  They enjoy significant freedom in their jobs and are trusted to do what they were good at. Successful NFEs seem to constructively curb the creative and entrepreneurial actions of their CEOs.  By challenging their CEOs and making explicit what the owning family’s strategic intentions are, they provide a reflective counterbalance needed to arrive at solid decisions and sound development.

Each NFE negotiates his or her relationship with the owning family in a different way.  To be an  NFE  working  in a family business means you must know the family…its traditions, how family members relate to one another, and how they deal with resolving their differences. As one of the NFE’s expressed: “If I would enter the family business with what I know now I would interview each of the key players personally and assess the discrepancies in their vision about the company. It’s all about family cohesion.  If  that’s not present to a satisfactory level I would not enter the company.” Meanwhile this NFE fulfilled an important role as communicator between business and family. Another NFE said bluntly that he followed his gut feeling on whether this was a truthful family and whether they “had their heart in the right place.” When he encountered severe family differences that affected the business, his positive feelings for the family helped him to keep an open mind toward all parties involved, sympathize with their differences and not become distrustful and defensive.

While the family and CEO often sought to involve the NFE with the family, these NFEs managed to maintain a certain distance. They knew that certain boundaries should not be crossed. As one of them said: “Everyday I was glad to drive home to my separate life 25 miles away. You do need a separate life to stay professional”. These NFEs were involved, but knew their place.

It takes two to tango

The right chemistry between the non-family executive and the business family is necessary for a good working relationship. However, NFEs are successful in a family business only when they are process-oriented persons who take their time, listen and then act. They are confident in themselves, in their expertise and in their influence. The NFE has a keen sense of when to confront and when not to press the issue. Importantly, the NFE is not shy about challenging his family CEO.  Equally important is the fact that the family CEO will “allow” himself to be “forced” to reconsider his steps when needed. He must respect his NFE enough to become convinced by him or her. Their working relationship is a continuous act of balancing power, ego and influence, with characters that complement each other.  While successful NFEs do not aspire to become CEOs, they seem to take vicarious pleasure as their CEO and his family gain success. They identify with the success of the business and experience their freedom to manage and advise the family business as a form of shadow entrepreneurship.

Above all, it takes two to tango. The family CEO must respect his business counterpart. He must know what kind of NFE the family and the business need need in order to thrive. He must be willing to learn and change and accept being challenged and given feedback by his NFE.  As one of the NFEs interviewed said:  “He’s got to do what he is good at and then trust and leave the rest to others.”

Albert Jan Thomassen is a former associate with the Family Business Consulting Group, Inc. Marjolein de Jong is consultant and executive coach. Both are based in the Netherlands.

Edited version, reprinted with permission of the authors.  Originally published in Families in Business Magazine.