Family comes first
It is perhaps no surprise that the accolade of Entrepreneur of the Year 2011 in Flanders has just been awarded to Vic Swerts, CEO of sealants manufacturer Soudal, a Belgian family business that has gone from strength to strength in the home market and internationally. See www.soudal.be.

soudalThough frequently overshadowed by big corporations, family businesses make up the majority of companies in most countries. Indeed in times of crisis their sturdy resilience and sustainability has strengthened their role as a backbone of the economy with most new jobs in recent years created by SMEs who are often family-owned. Yet coupled with their strengths, they also face special challenges.

In an extensive recent study1 , Egon Zehnder International explored what makes family businesses tick, asking 720 managers worldwide about their experiences. So what does make traditional family businesses so successful? Certainly their long term perspective which tends to foster innovation , value-based decision making and independence from the capital market. However, EZI concluded that family firms could be more successful still, were it not for certain negatives: namely, inter-generational rivalry, a lack of transparency in communications, and a preference for family members over external candidates.

EZI notes that the most common cause of conflict is doubts regarding the merits of family members who work at the company (60%). In fact, the very appointment of family members to management positions leads to conflict in more than one case out of four (p 30,32).

Many senior executives wonder whether 'their career prospects in a family business will develop in line with their performance and potential'. While 55% of owners claim to make management appointments purely on merit, only a third of executives believes that top appointments are made without consideration of family membership (p 38).

' For succession I prefer to look within the family, which often works, though brainline is more important than bloodline,” confirmed Vic Swerts recently
(In Tijd, p. 7 of October 4 2011).

Meanwhile in Egon Zehnder's survey, when it comes to CEO succession 75% of respondents consider that family members are at an advantage over non-family top management. Interestingly though, CEO succession is a greater possibility for non-family members in Europe than it is in the USA or Asia.

EZI identifies that recruiting top talents and integrating them into well-established structures that often seem short on transparency is a big challenge for family firms. 40% of the executives surveyed said that they would not work for a family business because of the lack of career prospects. While more than 70% of the top execs and owners surveyed think that formal integration processes for non-family are very important, only 25% report such systems in place at their companies (p40,41).

'These results chime with our own experience,' notes AHEAD's Managing Partner Guy Vereecke. 'Over the years our Family Practice has seen many businesses who took the decision to further professionalize their management by hiring very experienced managers from blue-chip multinationals. However some have then had difficulties afterwards when it comes to implementing the necessary change. It often boils down to the principle of : 'you might be right, but we don't do this that way here'. Or 'my grandfather who founded the company did it this way, so we can't change that!'

In summary, EZI concludes that with their robust value sets 'family businesses are as popular as ever but could be more so'. They could further boost their unique competitive strengths and enhance their attractiveness to top talent in 3 distinct ways: by strictly separating family and company interests; transparent and understandable decision making paths; and attractive career prospects.

If you would like a copy of this study, you can simply download it via www.egonzehnder.com. And if you run a family business and if you are interested to review your management recruitment or succession planning with an understanding and knowledgeable partner, please do not hesitate to contact Guy Vereecke at AHEAD on T. + 32 2 223 23 90.




 
AHEAD is a leading search firm specialising in high achievers. Headquartered in Brussels, we were formerly YESS International Brussels, created in 1990 by Egon Zehnder International.  Today AHEAD forms part of the extensive network covering Europe and beyond.
To receive more information, please do not hesitate to contact us via T. +32 (0) 2 223 23 90, or email us via CONTACT. It would be a pleasure to hear from you.
logo
SEARCH FOR HIGH ACHIEVERS

If you have recently changed your position or contact details, please be kind enough to inform us of any changes via CONTACT
or telephone +32 2 223 23 90. Or if you are not the original addressee, or would like to be added to our mailing list, please do let us know.