The Executive Brief

Overcoming Fear of Hiring from the Outside in Family Owned Businesses

Bob Schoenbaum Core Values, Culture, Executive Leadership, Executive Search

At KeyStone, we work exclusively with mid-market, privately-held businesses. And we are fortunate to count many family owned businesses as our clients. Hiring outside executives into family owned businesses can be a challenge - but it’s certainly doable, and companies reap the benefits of adding talented and transformational leaders to their team.

So, what makes family owned businesses unique, and what do they have in common?

  1. While most companies care deeply about their employees, family owned businesses consider their employees an extension of their family.
  2. Family owned businesses often have more long-term employees than other companies - when people come, they stay a long time.
  3. These companies usually have a purpose beyond just financial success - they want to provide a great and stable place for their employees to work and better their communities.
  4. Their cultures are highly collaborative and executives roll up their sleeves to get the job at hand done.
  5. They are highly cautious about hiring executives from outside the company.

What causes this heightened sense of caution? Typically, a previous experience with poor results. When a family business grows to a certain point and needs to bring in an experienced executive from the outside, it can be a challenge to have a large enough pool of candidates or to conduct thorough interviews. This can lead to a hire that does not fit the culture, the proverbial “bull in a china shop.” Some executives are not used to the family company mentality of executives rolling up their sleeves when necessary. It can be challenging for a family company, who often place a premium on being nice and respectful to let a poor culture fit go. The person often ends up staying too long, and by the time they leave there is much collateral damage, both in culture damage and opportunity cost to the business.

There are three essential aspects to ensuring the candidate is the right fit for the family owned business - skill set, leadership qualities and core values alignment. These can be determined through careful interviewing and vetting.

The Importance of Core Values Alignment

Unfortunately, no matter how talented an executive is, if s/he does not share the company’s values, it will never work out. How can you ensure the candidate is aligned with the company’s values? First, ensure the company has defined core values. Surprisingly, we see far too many companies who have not taken the time to define their core values - and it’s nearly impossible to determine fit if this hasn’t happened. After you’ve defined the core values, document these values in a core values manifesto. Involve the entire leadership team in this activity, disseminate widely and ensure employees are on board. Without definition and documentation, it is too easy to try and hire a candidate by “gut feel” and this almost never works out.

When interviewing, determine core values by asking situational questions, such as:

  • Describe a difficult ethical situation you had to work through and/or guide your team through? What was it, what did you decide to do and how did it turn out?
  • What’s one of the biggest mistakes you’ve made at work? What did you learn from it?
  • Describe a time when you disagreed with your boss on a strategic direction or initiative? What was it and how did you go about voicing your disagreement? How did it turn out?

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What Skill Set is Needed to Lead Your Family-Owned Business?

When it comes to finding the right skill set, it’s important to look beyond the resume. Often, when a family business makes the decision to bring in an outside candidate, they have a skill gap they are looking to fill. Through the interviewing process, make sure the candidate’s set of skills aligns with company needs.

Ask questions like:

  • (Sales) Give us an example of how through sales leadership you were able to help your team achieve their sales goals?
  • (Strategy) Tell us how you go about strategic planning; what methods do you use, who do you involve in the process, how is it communicated etc…
  • (Finance and Administration) What are the key metrics you’re paying attention to in your current/previous business and how do you go about tracking those metrics? How do you know when your area of the business is healthy/unhealthy
  • (Operational Excellence) Describe a time where you had limited resources and had come up with a creative/resourceful way to drive an initiative forward. What was it and how did it all turnout?

And don’t be afraid to ask for a second, third or fourth interview. Adding an executive to the team is a big deal - you can’t just hire a person who has a good resume and seems likable and hope for the best.

Leadership in Family-Run Businesses 

Great leadership isn’t unique to family business - but it is particularly important. While it may sound trite, it is true that people don’t care how much you know until they know how much you care. The ability to motivate, mentor and show genuine care for the welfare of employees are essential leadership qualities. When interviewing, ask specific questions to get at these qualities. Ask for specific examples - if a candidate cannot readily present real life examples, they’re probably lacking in this area.

Some examples:

  • Describe a situation when you’ve had to lead a change initiative and you encountered resistance. How did you handle the situation and how did it ultimately work out?
  • What are some of the most important lessons you’ve learned about leading a team? How would you expect to use that experience at this company?

The right outside executive can truly help a family owned business reach the next level of success - but only if they have the right skill set, the necessary leadership qualities and are aligned with the company’s core values. Too often, lack of vetting, incomplete interviewing techniques or a desire to be nice and keep the peace can lead a family owned business to hire the wrong candidate. Fear of the wrong hire can hold a family owned business back - but overcoming this fear and finding the perfect fit can be transformational.