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Selecting the next CEO for your family business
Selecting a company’s next CEO is one of the most significant decisions in an organization’s life. In every company, it is critical to find the right fit; in a family-owned business, the fit factor is even more consequential. The success and sustainability of the family’s main asset and source of income, and a significant piece of their identity, rests largely in the hands of the individual selected to be CEO of their family-owned business.
To an untrained observer, choosing the next CEO in a family company may appear apparent and straightforward: the first option is to choose a talented son or daughter of the current CEO—one interested in the work of the business. The next option is to choose a talented relative (a non-lineal descendent), or someone working in the company or from the outside. But it is neither this simplistic nor predetermined as a choice of options, and no family company can afford an error in today’s competitive and fast-changing business environment. An under-performing CEO, or one that is not in sync with the owners’ vision and values, can set a company and a family back, and some companies may never recover or regain their balance, focus and drive.
There is much at stake when transitioning executive leadership. Every family business today must pay close and special attention to the selection of its next CEO, and to the succession process. This begins with the recognition that succession is a dynamic process, rather than a pre-determined decision. Too often, business leaders view the CEO transition as little more than the hand-off of a baton. In reality, the continuity of the family business is a true team effort, with a game plan that is drawn up and implemented over time. It involves both generations of owners and business leaders working together to maintain momentum in the company, and continuing to adapt their succession game plan as needed–even close to the finish line.
During over decades of advising and studying CEO transitions in family businesses, we have designed, executed, and witnessed a variety of succession plans and transitions, including some detours. Every family business system’s dynamics, goals and timetable are unique. Still, a process that is well framed and executed with discipline¬–and is unhurried, uninterrupted, principled, fair, and transparent–is the surest way to transition to the right CEO. It is worth the owners’ investment of time and thoughtful planning to ensure that the appropriate individual is chosen to take the company to new heights. It is as important that the ownership group, board of directors, and family are united behind the new leader and his/her mandate.
