Survival Tips For CEOs At A Family-Owned Business

You’re coming into a family-owned business that’s been led by relatives for generations. Here’s what you need to know.

Once that is clear, the CEO can ensure that bonus targets align with what’s truly important to the family, says Norton. If, for example, the bonus is tied to how much money the CEO brings in, but he or she is limited in who can be fired—and hired—that wouldn’t be a fair goal. “One of the things the family has to do is make sure the non-family CEO gets a bonus based on how well he or she trains the members of the next generation,” she notes.

Don Fox, who left a 17-year career at Burger King to join Firehouse Subs and has been CEO of the franchise company since 2009, says CEOs also need to know which areas the owners want to have control over and what, if anything, is untouchable. “You need to have alignment on goals at the outset and you need to know the ground rules,” he notes.

Check your ego at the door. “That will get whacked around quite a bit, and you have to handle the criticism, whether it’s founded or not,” says Herrel. “A family member may not have any financial expertise or business knowledge, but boy, they have an opinion and you’re going to hear it.” Early on, Herrel spent hours with family members, listening to their dreams and plans for the business, as well as with employees on the front line and other stakeholders. That effort earned him the trust and confidence of even those who were skeptical about bringing in an outsider for the job.

“It does take a lot of time, but my recommendation as CEO is, take the time, listen, ask a lot of questions and don’t talk,” says Herrel. Because of the trust he earned, he was able to convince the family to invest $15 million to revitalize the property in 2008, at a time when most companies were hunkered down.

In some cases, you will be training the next generation of family owners, one of whom may eventually become your boss. That would be tough to swallow for some CEOs. But Miller says he didn’t mind. “The compensation was fine and the job was challenging and to me, and that was more important than the title.” It helps to care about the mission of the company, adds Miller, who grew up in Ashville. “I felt honored to be part of this mission that was bigger than me, bigger than the family, bigger than money. It was preserving this fabulous property, which benefits our whole community. If you don’t really believe in the mission and don’t share the family’s values, it’s never going to work.”

Stay as neutral as you can. Dozens of legendary family business battles that have played out in the press—e.g., Sumner Redstone and his children, the Koch brothers’ family feud spanning the ’90s, the soap opera-worthy Gucci family squabbles—should serve as cautionary tales on how toxic a family-owned situation can become. Non-family executives have to do their best to play it cool. This is especially challenging because the external CEO is often brought in by the board because the family isn’t getting along. “So they immediately try to grab the ear of the new CEO,” says Norton. “You might have one faction saying, ‘We want you to get this company fattened up and ready to sell,’ and the other one saying, ‘We have this long legacy and we want it to last forever so run this in a way that my children can take over someday.’ How in the world can that CEO possibly be successful?”

Even on smaller matters, two family members will bring their dispute to the CEO, each hoping to win him or her over. “You can’t allow triangulation with any family members, because eventually they’ll make up and you’ll lose,” says Miller. “Instead, explain that you can be sympathetic, but the only people who are able to solve it are the two people having the issue.”

Herrel recalls several occasions when he felt caught between warring family members. “I felt like it was my job to try and mediate the disagreement and find some common ground,” he says, adding that it was similar to his experience as CEO and chairman of apparel company Ashworth, where he often had to moderate heated discussions between dissenting board members. “It’s really incumbent upon the CEO to have everybody take a deep breath and listen to one another and try to understand and then look at what our common vision is for the company. If not, board meetings can get very dysfunctional.” In an effort to avoid conflict, Herrel did much of his legwork before board meetings, hearing people out and sewing up support to gain consensus. “Never sit down at the board table unless you have the votes to move forward,” he says.

Miller also warns non-family CEOs to remember their place. “You will hopefully become friendly with the family owners—but you’re not family and you still have to keep a professional distance.” He formed close and trusting bonds with multiple generations of Cecil family members, but was careful to remember his place. “I was friendly with all of them,” he recalls, “but blood is still thicker than water.”

Read more: The Benefits Of Self-Imposed Term Limits For CEOs


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