German Herrera Practice Group Leader, Miami and Atlanta
Family Business Advisory
Finding an equilibrium that leverages the best aspects of both family and business is the art of family business management.
Many of the most respected, best performing companies in the world are family-owned. With their long-term vision and high capacity to create employment, family businesses are a major growth driver in most national economies and make unique contributions to society in general.
Despite their inherent strengths and global economic significance, family-owned companies face unique vulnerabilities. Potential sources of discord among family members loom around every corner: Generational transitions; Major investment decisions; Appropriation of profits; Leadership appointments. After all, why should entrepreneurial families be less quarrelsome than any other group of relatives? The consequences of their disputes, however, can be more serious and far-reaching. Conflict is, perhaps, the greatest destroyer of value in family firms.
For family-owned companies to sustain dynamic progress across generations, they need to manage the inherent conflict between family and business on a consistent basis. Finding an equilibrium that leverages the best aspects of both family and business is difficult, but if done well, offers handsome rewards. This is the art of family business management.
Egon Zehnder’s Family Business Advisory assists families, owners, and managers in navigating the challenges of leadership, succession, and governance across generations. Based on decades of experience serving many of the world’s finest family companies, we know that the critical first step in this journey is to build alignment amongst family members around the family’s philosophy and approach to business and ownership. With this in mind, our Family Business Advisors work closely with family members and owners to create an environment conducive to driving the best people decisions in their specific context.
Business and Family Governance Consulting
It is important to articulate a governance framework that separates business from ownership and defines a clear process for families and owners to resolve family and business issues. This could take the form of Family Councils, Owners’ Councils, Advisory Boards, etc. Our Family Business Advisors bring global knowledge and experience to help you craft the appropriate governance frameworks and define the remit of these bodies. Based on a clear assessment of the strategy and the ownership structure, we proactively assist our clients in the competency-based selection of independent directors and advisors to bring these governance mechanisms to life. For many of our family business clients, we also periodically review the effectiveness of these governance bodies.
Founder and Next Generation Transitions
Founder transition is an emotional and challenging issue that faces every family business at some time. Each generational transition is an opportunity to reflect on the future strategy and the ownership and management structure. Preparing for this transition in advance is critical to the continued success of the business. This process needs to be thoughtfully planned rather than managed only as an eventuality. We assist family companies in planning for transition by obtaining an accurate picture of existing family talents and their motivations, benchmarking them against the best available internal and external resources (especially in the critical phase of founder transition), and analyzing their potential, using a unique methodology, in the context of the future strategy of the business and the vision of the family.
Ensuring objectivity and meritocracy in appointments is vital to the long-term success of a family business. We are frequently asked by our clients to evaluate and assess next generation family leaders with the objective of identifying fitting roles for the family members and to develop plans for grooming these individuals to fully realize their potential.
Family and Non-Family CXO Succession
Succession is one of the biggest inflection points in a family business. Getting it right is critical. Therefore, succession needs to be planned well in advance and the process needs to be executed thoroughly. Egon Zehnder works with the key stakeholders to prepare a succession process that encompasses both internal and external candidates, building alignment across generations and ensuring that the role and responsibilities are clearly articulated and understood. In all these decisions it is important that there is a good fit between family values and culture and the individual’s value systems.
For many family firms, recruiting top executives from outside the family represents a major challenge. At the start of such assignments, we assure all stakeholders are aligned about the expectations and profile of the senior executive to be attracted. By drawing up value- and competency-based CXO position profiles, Egon Zehnder helps your family company identify and evaluate relevant internal and external, family and non-family candidates.
Independent of the candidate being a family or non-family member, the integration during the first six months is vital for receiving the expected value and impact. In respect to this particular phase we provide an Accelerated Integration service which helps the new family or non-family candidate to fill out the position successfully and achieve the expected performance. In respect to non-family CXOs it is even more crucial to gain the trust of the family and to adapt to their working style.
We pride ourselves on the fact that most of our client relationships are long-term. We earn your loyalty by being energetically responsive to your needs and tenaciously committed to the legacy and ongoing success of your family business. We perceive ourselves as an equal, global partnership. Our values and philosophy are very similar to family firms and we are uniquely qualified to understand the dynamics and challenges in particular in respect to governance and succession issues of family business environments. Our goal across all our services is to help you make better people decisions for critical roles, systematically increase your leaders’ readiness to take on bigger challenges, build a sustainable talent pipeline, and ensure that your family business has the diverse strengths required to sustain competitive advantage.
Egon Zehnder is the exclusive global alliance partner of the prestigious Family Business Network International for the fields of Board Consulting, Succession, Leadership and Organizational Development. FBN-I is the world’s leading family business organization with more than 5,000 member firms across 45 countries. A not-for-profit organization, the network is “by families, for families.”