Knowledge Center: Publication
CEO & Executive Succession Planning
The family business dilemma in CEO succession6/27/2014
In all family business around the world, whatever the country or the culture, a major concern and critical challenge is CEO succession. Most family businesses, whatever their size, have grown thanks to the exceptional contribution of an emblematic founder. This historical figure puts a constant pressure on any one that follows in the leader (CEO) role, especially as they will have to accept, sometime unfavorable, comparisons.
In family organizations with a long history, some of the followers manage to create the same status as the one of the founder, which results in a group of ‘founding fathers’ who are even more impressive for the successor to live up to. In such circumstances, appointing the right successor is a key challenge for family-owned companies because of the need to ensure the continued development of the business along with the demand to protect the family assets and to guarantee secure governance. This challenge often takes the form of a decision dilemma between appointing someone from within the family, who will be strongly connected to the family heritage and to the soul of the company, or selecting an experienced external candidate, who will reassure by demonstrating skills to further develop the business and create value for the family.
In our experience, this is not an either/or decision. Any family company CEO will be expected to be a successful business leader as well as the guardian of family assets. But, for an external candidate to become such a guardian, or for the family candidate to appear as a legitimate business leader, they will both need to demonstrate specific attributes to be successful in their respective role. Understanding these attributes, to be used as explicit hiring criteria, can help families to make better appointments so that their businesses are better led and their assets protected and grown.