Family Businesses and the War for Talent

Family businesses represent a significant majority of the European, Asian and US landscape. Yet so much that we focus on in business, governance, and search is designed for corporates.

In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner at Better Boards, is joined by Andreas von Specht. Andreas von Specht is a family shareholder and NED of Berenberg Bank, Europe’s second-oldest private bank, and shareholder of Bergos Bank in Zurich. He founded AvS Advisors in 2011 to advise privately held clients on succession and family governance. Previously, he built a career in Consumer Goods and was a long-time partner at Egon Zehnder in Germany and France.

Having conducted over 3,000 interviews with owners, CEOs, and board members, Andreas champions effective governance in family businesses. He brings deep expertise in recruiting top executives and non-executives, while highlighting pitfalls to avoid in leadership appointments.

“30 years ago, it was very much based on a ‘nose factor’ kind of selection, and it has become a really well thought-through search process.”

Andreas’ upbringing in a family business gives him special insight into the culture, thought patterns, and habits of family businesses. He can draw a line from pre-Internet ‘nose factor’ talent searches to the current professionalised systems. While the unique nuances of strong family shareholder groups and cultural fit factors are the trump card, competency testing, benchmarking, and sophisticated evaluations are now in play.

“There is one competency that is a little bit difficult to describe, which I would call a special ability to operate in a family business.”

Succeeding in a family business environment is possible, even if one is coming over from the corporate world. Andreas believes it requires high emotional intelligence (EQ) and a moderate ego.

Successful candidates must be able to bring family members along on the business journey while preserving relationships. Humility, a sense of humour, and adaptability must overlay real business acumen and competency, as families will ask if the executive or board candidate brings particularly valuable or missing skills to the business.

“Results and values move together, so performance sits alongside legacy and family expectations.”

Within a family business, governance always has more layers, with owners, the board, a family council, and the next generation all in the mix. Leaders must agree on what short-term and long-term really mean for the business, and the same goes for change initiatives. He recommends a clear change contract at the beginning to avoid misunderstandings.

“It takes two to tango… we are in the midst of a fierce war for talent, and that must be taken into consideration.”

For families, there is a ‘search before the search’ to select a search partner that understands their needs and the family culture. Trust is critical. It is also critical to have clear expectations and alignments of what they’re really looking for and what good looks like.

Families must also remember it takes two. Quality, independent candidates for executive roles and board positions will have choices. Families just can’t pick the best candidate to serve at their leisure. Instead, there is a certain degree of selling required to get to know each other and build trust.

 

The top three takeaways from our conversation for effective boards are:

• Fit and clarity regarding the role and requirements must come first.
• Cultural fit often decides the outcome.
• Professionalise the whole journey so that the hiring process leads to a successful, longer-term onboarding and integration.

 

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