In my last column, I repeatedly mentioned that the success, growth and well-being of a family business depend on its ability to attract, motivate, develop and retain outstanding executives who are not kin.
I also hasten to add that any business with the intention to continue and grow needs executives with a profile matching the business culture, organization, and strategy (Gallo, 1991; Welch, 2005).
The intermingling of the family, business and ownership ecosystem spawns a different organizational business culture unique only among family owned businesses. To be effective, non-family executives must be able to merge their set of values with that of the new culture. When there is alignment, a cultural fit creates synergies between non-family executives and the family business.
In one of my overseas talks last March, I recall one participant in his late 60’s candidly sharing his thoughts and reservations on the need to hire non family executives. He expressed his concerns and even went further by questioning my views related to the hiring of senior non-family executives. The business owner’s exact words:
1. Professionals cannot be trusted
2. They are only after their personal and selfish interests
3. They are very expensive
4. They are not as passionate and committed as family members
5. They jump from one company to another
6. They will never be loyal to the organization
My response was swift. Firstly, I emphasized that hiring non-family executives is not just about showcasing their impressive credentials. Using the latter as a singular yardstick can present challenges to the family business.
Secondly, there are four hiring pillars that owners must embrace. These are the technical skills, human relations skills, track record and the “cultural” fit of the candidate. Neglecting one pillar in the hiring process will likely lead to possible failure. The latter may be able to deliver based on measureable expectations but if he or she fails to manage the impulsive nature of the owners, the tenure will likely be short lived.
Thirdly, it is extremely important for the organization to create an environment where business is defined by a set of rules, roles and responsibilities. This will minimize the confusion when non-family executives join the organization.
I ended my talk by sharing an inspiring story about Liem Sioe Liong (LSL), the Salim Group founder and patriarch of one of the largest conglomerates in Indonesia. LSL once remarked when asked why he took a major leap of faith in hiring non-family members during his start up years he said…
“I have a strong management team and they see the opportunities but choosing the right people and believing in professionalism is my underlying approach. You see I believe in teamwork and not dictatorship.”
Through time, the steady collaboration between family members and professionals of the group, reinforced by the shared vision of the founder and the next generation successor, youngest son, Anthony Salim (US$7B), created an empire with 300-plus corporations. The group has extended its reach to several continents namely Asia, North America, Europe and Australia.
The Philippines and Hong Kong operations is run by a professional executive in the person of Manny Pangilinan under the First Pacific Group Holdings. This professional empowerment has produced unprecedented growth outside Salim’s sphere of interest, making the Pangilinan model a gold standard for family owned enterprises to emulate.
To quote Steve Jobs, “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”