Posts Tagged ‘family companies’

Retail Executives: Recruiting Executives To A Family-Owned Company

Wednesday, August 18th, 2010

 

The first blush comment from most in the recruiting industry is that recruiting executives to family-owned private businesses is difficult or near impossible. But, if you look at the facts, there are large family-owned companies that have successfully grown and have successfully recruited top talent. For example, look at Hershey, S. E. Johnson, H. E. Butt, Wegman’s, Jockey International, and Carlson Companies as prime examples of successful family-owned businesses.

In my opinion, it is not the family ownership that makes recruiting difficult. The issue is the management style of the ownership. The style of the executive evaluating the opportunity is equally important.

An executive considering joining a family-owned business has several questions to ask. These are:

What will be my future with the company? Is there opportunity for personal growth? Are there family members involved who will limit my chances for promotion?

What is the financial health of the company and is the family willing to invest more or dilute their ownership through debt or equity? Is the family willing to be open about the financials and their strategies?

How willing is the family to invest in new equipment, research, systems, etc?

Is the family open to new ideas?

Is the family willing to share interest in the business to key executives? Will this interest be developed on an open basis? Will this be on a true partnership basis?

Is the family really willing to delegate responsibilities to non-family members?

How long does the family plan to own/control the company? What will be the exit strategy for the family ownership: IPO, strategic sale, or other? Are all family owners on the same page in terms of the exit strategy?

At the same time, family owners have questions to ask the prospective executive. Among the questions are:

Is this executive really committed? Will he/she put in the effort required to take the business to the next level?

Is this executive willing to share the risk? If the economy gets soft, will this executive pitch in and work harder and smarter and also accept the earnings declines that the ownership suffers…or will this executive just move on when times are tough?

Will this executive work with us as we ponder through difficult times and difficult financing issues?

Is this executive willing to put skin in the game (i.e.: personal finances, or extraordinary effort)?

The success or failure in both parties trying to develop an effective working relationship depends on both parties’ questions being put on the table and answered truthfully and in an open manner.

The company that is not willing to provide full and honest disclosure and not truly willing to answer all the executive’s questions will make recruitment difficult. A recruiter will be able to bring in a hired hand but will not be able to recruit a true partner for the business.

The executive who wants the upside but who also wants guarantees is probably not the right executive either.

For a recruiter, the challenge is to quickly learn about the family and their willingness to answer the questions candidates will ask. To the degree the family is willing to answer those questions will determine the level of candidate the recruiter will be able to bring to the table. This requires a skilled executive recruiter who knows how to assess family organizations and also assess candidates for their ability to fit the circumstances.

As a side note: These issues are not as important with larger family-owned public companies. In smaller family-owned public companies these issues and the management style are still important. Even though the ownership and the financial data is public information, the family involvement in the business and their longer term intentions need to be disclosed to potential executives. What is most important for the executive to discover in these circumstances is whether the family self-interests are aligned with the short- and longer-term needs of the business.

Retail Executives: Should you accept your employer’s counter offer?

Wednesday, August 4th, 2010

 

This is a serious question that cannot be easily answered.

The first question you need to ask yourself is why did you look at this other company and why did you let it get to an offer stage if you were not serious about leaving?

Were you unhappy with your superior?

Were you underappreciated and underpaid?

Was your career path blocked?

Did you have concerns about the future of your employer?

Do you have an especially high regard for the prospective employer?

Before you accept your current employer’s counter offer, you seriously need to think about what has really changed with that counter offer that will make you happy. It may be easy to go back home and tell the family that you will not need to relocate because your employer made all kinds of promises and rewarded you with extra compensation. But, if conditions were bad enough to make you look elsewhere, there is little chance that things have changed significantly.

The truth is that most employees who accept a counter offer from their current employer usually leave the company within two years.

Why? In my experience there are several reasons.

Your current employer may never fully trust you again. Because you got to the stage of an offer, there is suspicion that you traded too much secret information.

Your employer also may believe you will leave again in the future. So, favored appointments will tend to go to those in the organization that have earned management’s trust.

If you were transferred away from a superior you did not like, that executive usually remains with the organization and will become a political opponent.

If you were disillusioned with your company’s future, the likelihood of that changing is minimal.

My advice to any executive is that you should not seriously look at other career opportunities if you fully believe your career is on track. Why jeopardize your role with your current employer and why create a reason for your employer to have less reason to trust and invest in your development?

On the other hand, if you feel that your advancement is blocked or if you have reservations about your employer’s future, you should actively look for other opportunities and be committed to the change.