By The People At Work
The People at Work discusses: Why externally appointed CEOs in family businesses are in a league of their own.
External CEOs in family businesses are indeed a different breed. Often, they are brought in during times of need – such as when navigating a complex generational transition, providing a bridge between generations where there is a talent gap, when there is a desire for international expansion, or when the family business is seeking a transformation from within. Whatever the purpose, these CEOs are expected to be the catalysts for change, yet they must achieve this without disrupting the delicate familial ecosystem.
Unlike their peers in non-family enterprises, they operate in a world where the business narrative is deeply interwoven with the family’s identity. They manage the company’s balance sheet along with its emotional ledger.
What Makes an External CEO for a Family Business Special?
Foremost, is their approach to decision-making. In a typical corporate environment, decisions can be driven by shareholder value and business results. However, in a family business, decisions are often more long-term, aiming to preserve the company’s legacy and ensure its longevity for future generations. Thus, an external CEO must balance the need for immediate and tangible success with strategic, sustainable growth.
Communication, too, takes on a different dimension. In a family business, the external CEO is often the bridge between the family, other stakeholders, and the wider company. They must be adept at dealing with stakeholders who may comprise family members as well as long-time trusted business associates while translating the family’s vision into a language that employees understand. This requires not just business acumen but a deep sensitivity to the nuances of the family’s communication style and expectations.
Moreover, beyond the matter of appointing a successor, succession planning involves mentoring and preparing the next generation while respecting the family’s choices and timing. The external CEO is often instrumental in this process, identifying and nurturing potential within the family or the company, ensuring that when the time comes, the transition is smooth and the business is in capable hands.
To thrive in this unique environment, an external CEO must be a consummate leader, constantly adapting to the evolving landscape of the family business while also bringing in fresh perspectives and knowledge. They must possess the humility to recognise that they are part of something that predates and will likely outlast their tenure and the courage to make tough decisions that will shape the future of family enterprise.
The family business demands that the CEO must be a master tailor, crafting strategies and solutions that fit the specific contours of the business and its family.
This role, complex and demanding though it may be, offers a unique opportunity to impact lives and legacies in a way that few other leadership positions can.