Leadership is a subject that touches upon many aspects of the family firm – from next-generation development to succession planning, from board effectiveness to the integration of non-family executives into the firm and beyond. But leadership can be difficult to define and many individuals within the system of family businesses have their own definition of what good looks like.
And unclear definition of leadership can lead to muddled expectations and the development of multiple styles of leadership within the firm. There are no core skills, behaviors and personality traits which form the “ideal” leader, and diversity should be encouraged. However, it is necessary for all family firms to determine desired leadership capabilities in line with its values and strategies.
Making explicit the reason why families are in business together and how they plan to achieve commercial and social success is a key prerequisite for ensuring the preservation of a legacy and the ability to adapt leadership styles to changing market conditions and generational change. Coupled with this is the need to be very explicit about the competencies and behaviors that must be identified to support values and strategy and to ensure these are developed over time.
Identifying what is expected of leadership is only part of the equation. Families must work hard to identify “how” leadership is to be exercised. Not all who hold managerial positions within family firms are born leaders. But leadership can be learned. And leadership can be enhanced by attracting the best possible talent from outside the firm.
When assessing family business leadership, ask yourself these key questions.
• Have you been explicit about your values?
• Have you been explicit about your strategy?
• Have you found leaders who are best able to deliver on both? And what is your fair and transparent process for doing so?
• Do you invest in leadership development and coaching for your firm?
• When do you begin this investment for the next generation?
• Do you expect leaders to be all things to all people?
• Do you seek to build leadership teams that reflect a variety of capabilities and styles? And how do you ensure you have what you need?
• How much exposure do you provide to leadership role models outside the firm?
• How do you measure performance on a regular basis?
Key Family Business Leadership Insights to Think About:
• Ensure you have a fully developed leadership framework that reflects your values and strategy; ensure this is tailor made for your firm and do not “borrow” from others.
• Work to build teams of leaders who can deliver what you need and who understand their core strengths and development needs; self-awareness is key.
• Learn together and foster a spirit of openness. Share strengths and development plans such that each member of a board or the family can support each others progress.
• Deal quickly and immediately with leadership under performance in a fair and transparent manner.
• Regularly review your leadership framework to …