Family-owned Businesses - A Human Story: Part 3

Finding the Leaders For What's Next

We continue our investigation into the world of the family-owned business by unpacking the executive hiring process. Some pitfalls can compromise a lasting fit. Fortunately, with honesty, foresight and understanding they can be overcome. And the employee value proposition for an FOB is in no doubt.

Our series is based on conversations with senior Amrop Partners around the world. Professionals who have cultivated deep and trusting relationships with owners and successors. We address growing and globalizing mid-sized FOBs (with a turnover in developed markets of minimum $1-10 billion, and in emerging markets of $250 million to $2 billion). Founders or descendants hold significant share capital and/or voting rights.¹

1 - The Context

Any business relies on its leaders to steer it into an uncertain future. In their quest for the best, Family-Owned Businesses must compete with other suitors: listed global players, agile disruptors and unlisted cult brands. Before exploring what is different about the search process for an FOB, let’s be clear on what is not. “It’s about the thorough research, no matter what the role,” says this Amrop Partner. “You may know the candidates, but you still have to do the work.” A job description, says another Partner, is “a commodity — a piece of paper.” As we’ll see, this is the tip of the iceberg.

In ‘Lifecycle’ we examined critical evolutionary phases of an FOB. These may culminate in listed status, when many distinctions of an FOB dissolve. Until then, executives can expect a culture and operating environment that they are unlikely to find elsewhere. Several Amrop Partners emphasize the prime considerations for family-owned hiring organizations: will this candidate fit our culture and espouse our values? Will the chemistry work? Is our legacy safe in this person’s hands? These factors matter as much as competencies do as the executive will likely be working closely with family members.

2 - The Search

An FOB decides to recruit. What now? The executive search professional must take the time to get to the heart of the matter.

Consultation

“It's vital to ensure the firm really wants a C-suite hire,” says one Amrop Partner. One FOB was seeking both a Head of Strategy and a CFO. The Amrop Lead Partner suggested appointing a young Chief of Staff to share the strategy role with the (costly) CFO. “Why not consider the structure first, then hire a head of strategy?”

Family dynamics can be foggy. “There's a governance issue,” says another Amrop Partner. “Who decides there are three siblings to consider? Does one get the lead? How do we handle the others? More than appointing a CEO, you must look at the whole context and structure.” An Amrop Partner recalls a listed company owned by two families. “At least six to eight second generation family members are in different roles.” Another has a board for each business unit. The board members have different opinions on an external hire. “Some have a glass ceiling because they won’t let go, others know they need an external brain.”

A clear and unbiased view of the current status is essential. But it is also important to look to the future. An Amrop Partner recommends considering tomorrow’s governance structures when hiring today’s FOB executives. Consider the new CFO who brings not only financial acumen but can guide board transformation and install an audit committee.

Roles

As the FOB evolves, the pool of family members seeking key roles will expand. Where majority ownership or decision-making remains in family hands, the human chess board must answer both business and family needs. FOBs may insert a family member into the CEO role and limit external hiring to technical or specialist functions: CFOs, CIOs, HR and CMOs. Whilst it would be wrong to generalize, several Amrop Partners observe this tendency during earlier, more manageable iterations of an FOB. Says one: “when they realize that nobody can do the job internally, they seek outside.”

Process

Once a solid, forward-looking brief is established, the hiring process will likely reflect distinctive cultural LINK TO ARTICLE 2 - CULTURE facets of family-owned businesses, as explored in our previous article.2 ‘Tight-knit Discretion’ is one. A candidate may not know the name of their potential employer until they meet. An Amrop Partner relates a case in which “only very few were told what company we were working for. They met three candidates, rather than five to six. You need to maintain the discretion for much longer.”

Cultural fit is the prime consideration for FOBs — more than for other types of business. Checking it demands a deep dive into an executive’s mindset: subtle territory that isn’t easy to summarize on a scorecard. Clients may request an open-ended meeting to test the waters. The signal-spotting is constant, says an Amrop Partner: “If you demonstrate EQ in appreciating the proposition you will likely have the EQ to appreciate the adaptability you’ll need in the role and culture. A failure to appreciate it signals failures in other areas.” Another confirms the need for “intuition, trying and testing. You’ve got to work much harder at mitigating risk in the client’s mind.”

Provenance

When it comes to mapping the search territory for an FOB executive, the cultural facet of ‘two-way mirror’ (respecting the legacy whilst looking far ahead) also plays a role. These are long-term appointments requiring a long-term attitude. “They hate job hoppers,” says one Amrop Partner.

Nor do FOBs seek a track record in a single, non-family listed multinational. “Only a few are flexible enough,” says one Amrop Partner. Another adds: “We avoid people who have always worked in scaled-up large companies because they lack the creation process. The problems they have dealt with are going to be very different from the problems this company is likely to have.”

Instead, family-owned businesses value candidates offering a steady cycle of role transitions, ideally in different ownership models. An international track record is appreciated by FOBs branching out of their domestic markets. But above all, in line with the cultural facet of ‘stable homogeneity’ FOBs seek an understanding of a business like theirs.

Profile

Beyond a technical job description, what specific leadership style does an FOB seek? The FOB executive is an anchor, “giving comfort that you are the stable factor while other things are transitioning and changing,” as one Amrop Partner puts it. The profile embraces two perspectives: continuity and change. Within these, eight key indicators emerge.

Assuring continuity and change in an FOB | 8 indicators for incoming leaders.

Patient: Understands and tolerates family processes, presence and politics, appraises the context in a reflective way with an eye on medium- to long-term outcomes.
Collaborative: Addresses the needs of multiple stakeholders, assuring a constant communication flow with the family (whether family is in a C-Suite, advisory or ownership-only capacity).
Diplomatic: A bridge and problem-solver seeking unity in difference and gracefully conceding final decision-making to the family as necessary.
Humble: Understands and appreciates the company’s strengths, prioritizes its legacy over personal ego or status.
Transformative: Discerns which areas in the business are most appropriate for change (must-haves, vs. nice-to-haves), leverages lived experiences of success and failure in compatible organizations.
Entrepreneurial: Possesses the ownership gene - taking care of the business as if it was theirs whilst understanding that it is not.
Agile: Is willing and able to wear multiple hats that may transcend the original role scope, and to flex to ambiguous circumstances.
Focused: Has an eye on the ball and a quiet ambition to drive the business agenda and deliver measurable outcomes in co-decided areas.

Presenting the role

Building the narrative for candidates is an ambassadorial exercise. It is based on the nuances of working with an FOB and adeptly expresses the role proposition.

In presenting the role to a candidate it is vital to manage expectations. “We are careful in articulating the downsides. Where the company is headed and how the role needs to play into that strategy. How the person needs to go beyond the standard merit that you can bring to any company,” says this Amrop Partner. “If a family member has stepped into this role, your ability to work with a founder or a shareholder will be important. And sometimes there are multiple family members…”

Family-businesses have a reputation for stability and low executive churn. Again, an over-riding set of factors prevails: “The culture, values, heritage. A long-term relationship.” However, change will inevitably come. For example, if the firm is sold the C-suite team will almost always be changed, says one Amrop Partner. Another confirms: “Some things you see today are not going to be there in a year. A transition. Co-owners looking to keep the family out. Restructuring. The candidate will have to play ball.” Regarding undertakings to executives, successors may have different ideas from their predecessors. “It was my father who made that promise, not us. And now everything’s changed.”

Candidates should also anticipate blurred boundaries, in line with the cultural facet of ‘entrepreneurial DNA.’ Executives expecting iron-clad work-life parameters and remuneration for that Saturday golf game may need to think again.

However, this fluidity can translate into more flexibility than heavy corporate architectures. “You could take your skills to the family environment and go up one step. You’ve still progressed,” says this Amrop Partner. Another confirms: “You can move to a more open environment and participate more in the strategy and the execution of a business plan, M&A and so on.” Another agrees: “Typically you will get a lot of freedom. A lot of interesting things which some senior leaders find fascinating.”

In this mobile environment an executive may take on more roles than they bargained for. An Amrop Partner relates hiring a CEO for a family office who also ran the family estate and an airfield.

Loyalty may be rewarded with long tenure, examples abound of people who have grown into significant roles in a family business, after ‘stress-testing trust and loyalty over time,’ as one Amrop Partner puts it.

However, candidates may well need to exercise patience during the hiring process — partially linked to the all-important (and subtle) exploration of personality and culture-fit. “Family-owned clients talk more, take longer to decide,” the Partner continues. “Remember it’s about lower risk, longer planning.” The hire can take at least 50% longer than in a non-FOB, he estimates.

See the full article for more.

Compensation

Pay grids for listed organizations are unlikely to help candidates frame their expectations from an FOB.

“In the listed environment Nominations and Remunerations Committees look at performance-based measures. They are independent and apolitical. They are conducting managed succession. The strategy is embedded, and the listed entity executes it.”

In line with the cultural facet of ‘Expectant Caring’ a high-performing executive will be rewarded, say some Amrop Partners. “If you are good, owners are generous. They may not pay 5% this year but double your salary. They don’t pay typical money.” Another is more cautious: “It’s likely you will be paid less than for the same role in a multinational. If you accept this, it means you share the values, mission and strategy.”

However, their findings are inconclusive and according to one recent review3, suffer from problematic methodology (inconsistent definitions and bias).

3 - Integration

Onboarding

Given the particularities of the FOB ecosystem, one Amrop Partner proposes a change of vocabulary: “Transition is a better word than onboarding which by design is supposed to be shorter. More to do with familiarization, less with doing the real job.” She recalls being summoned to repair the damage caused by an appointment before the family member was ready. “He was inserted as a number two, given no specific role or portfolio. He got lost in the operation.” She recommends a formally planned process subject to governance at board and/or director level. It involves milestones “In the next six to twelve months, what success signals would you like to see?” An objective observer should oversee the transition.

Setting the right conditions for a successful hire often means straight talking, she says. “We grill the founder: if the process was redone, how would you enable and support more? We pin down clarity and help the client understand the need for a transition process.” Another Amrop Partner recommends spending a third of the search process on onboarding to ensure the continuity that FOBs prize.

Read the full report

Family-owned Business - Part 3: Recruiting

Download

Sources and further reading

¹ Asaf, A., Carvalho, I., Tellechea, J., Leke, A., Malatest, F. (2023). The secrets of outperforming family-owned businesses. McKinsey & Company

² Family-owned Businesses, a Human Story, Part Two - Culture (2025). Amrop.

³ Michiels, A., Botero, I.C., Kidwell, R.E. (2022) Toward a Family Science Perspective on Executive Compensation in Family Firms: A Review and Research Agenda, Family Business Review Vol 35, Issue 1, March 2022, Pages 45-67.