Rarely, if ever, does one find a successful family business that is managed exclusively by family members. Non-family, professional managers have either contributed to building the business or are required to maintain or grow the business that the family has founded. Why should a talented manager elect to join a family business? And if he does, how should he prepare himself to navigate the dual –family and business- systems, which drive the business.
There are two common scenarios in which a professional manager will confront the family system while managing his business. He may join a business and work for the founders and contribute to its success, or he may join the family business in which the founder would like to bring his family.
In either situation, the professional manager will be challenged to understand how and business operates when it is oriented both towards profitability and the implementation of a family succession plan. To do so, the professional manager should develop a transparent relationship with the founder. He should elicit from the founder the details of his family and business plan, and he should disclose his career objectives.
To be effective, the manager needs to understand whether the founder envisions bringing his son or daughter up through the ranks or has he already made place in the executive suite, whether he has decided that his son will succeed him in all events or is he committed to testing the son’s skills, drive and desire to succeed? And, then he should develop an understanding of what career path the founder envisions for him. Through all of this, the manager must maintain his strategy of developing a trusting relationship with the founder, and to articulate to the founder that he understands and is committed to assisting him realize his business and family goals.
Concurrent with solidifying his relationship with the founder, the professional manager should have a strategy to further his own interests. Why is he taking on this job? What are his goals? The least desirable objective is to chase equity. Minority ownership in a family business is difficult to obtain and probably worthless when obtained.
Instead, the professional manager is better served by focusing on current compensation, phantom equity, bonus and other incentive arrangements and an exit package. He should take the lead to identify benchmarks to measure his success in assisting the founder and his son. For example, if the son requires mentoring, the professional manager might negotiate an arrangement in which he is awarded bonuses based upon the son’s achieving certain predetermined benchmarks. Each time a pre-determined benchmark is achieved by the son, the professional manager might earn phantom equity, or a cash bonus.
The professional manager should also partner with the son assist him to advance. He is the one who has worked with the father; he knows his work temperament, his style of management, and can be of great assistance to the incoming son. The key to enabling this partnering is that the professional make clear to the son that he is fully aware of the family objectives and that he considers it his job to contribute to a successful succession. He should not permit himself to be positioned as an obstacle to the succession; he is an enabler.
The independent board, committee and advisory board are very useful to the manager. He will be continuously judged (and rewarded) for his ability to reach very subjective benchmarks and he should require that these judgments be made by neutral, independent, arbiters. The manager should play a proactive role in determining the composition of these bodies; he should discourage the use of family retainers and push for selecting professionals and business people who are financially independent of the family
The professional manager’s alliances with the founder and the son, and the family’s and professional manager’s abilities to cooperatively map mutually dependent career paths are critical to the professional manager's success. Transparency in the business environment, in disclosing the family plan, in articulating the professional's career objectives, and in the principals’ ability to navigate sometimes “touchy” subjects are critical to everyone's success.
