Managing to Lead the Family Business

Otis Baskin

A business needs a Chief Executive Officer (CEO) and other senior executives to develop strategy and move the business forward. Leadership in a family business, just as in any business, requires knowledge, experience, good judgment and credibility relative to the business.

But, in many family businesses that have succeeded in several generations, leadership becomes a team process where no one individual is saying, “I am the boss and you will do what I tell you to do and you should show loyalty to me.” Instead, a group of siblings or cousins says, “We are a team of executives and owners. Each of us is here not just because of our last name or because of who our grandfather was, but because we have prepared ourselves to be here, because we’re motivated to be here, and because we bring skills and talents needed by our business. We have worked together to develop a common vision and a common strategy that we are implementing together to for the benefit of all owners in keeping with our family values.”

While, one family member might be CEO, another might be CFO, and still another might be a senior vice president heading up sales or production, they function as a team.  In addition, one or two members of the team might be key non-family executives who supplement needed skill and knowledge not present in the family. Critical to their success as a leadership team is their “profound process knowledge”, their collective skill, and experience combined with their commitment to leading for the benefit of all involved, not just for themselves.

One family I know in the health care business had to deal with the sudden death of their father and the business founder.  The business, created by a physician who was also an exceptionally gifted entrepreneur, floundered for a while until each sibling realized that each had an ability to lead but none of them could be their father.  When this sibling group consisting of a clinical physician, a medical researcher, and a health care attorney finally came together as a leadership team, they paid less attention to hierarchy and developed more concern for vision and values.  The result was a business that grew far beyond the vision of the founder but remained within the scope of his legacy.

Although the words “leadership” and “management” are often used interchangeably, it is helpful to realize their separate connotations. Leadership needs to be focused primarily on vision and on a strategy that will fulfill or attain that vision while creating a way to move forward.

Management is more concerned with implementing tasks that need to be done. Management is more concerned with control and reporting relationships.  Management implies organization; leadership does not – it can be messy and chaotic. Managers can be leaders and leaders can be managers, but the two abilities don’t necessarily go together.

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