Successfully running a family business as an outside CEO requires specific competencies

Successfully running a family business as an outside CEO requires specific competencies.

In an article in the NRC Handelsblad, Dirk Harm Eijssen provides insight into these competencies. In doing so, he compares the family business to a teddy bear as part of the family’s identity: “The family doesn’t just hand you that bear. Because when you are attached to the company, you are attached to the family”. Gaining trust is more important than short-term actions.

Below is Dirk-Harm Eijssen’s excerpt from the NRC article. The full article can be read back at the following link.

So there are plenty of situations where an outside director is actually the best choice, says Dirk Harm Eijssen, co-founder of Gwynt, a consulting firm for family businesses. Someone from the outside brings new knowledge, a fresh perspective, and can make an organization more professional. Families themselves often find the latter particularly difficult, Eijssen notes. “But it is necessary to keep up with the market.”

Choosing an outside director requires something of both the new top executive and the family, Eijssen knows. There is a danger that family members, especially the former director, may find it difficult to distance themselves. “We always say then: go on a cruise for three months. Give the new director a chance. Sometimes such change requires hefty counter forces. Could be a strong board of commissioners, but also family members addressing the former director.”

Conversely, an outside administrator must realize the emotions and history that surround him, Eijssen says. “When you make a decision – even a seemingly simple one – discuss it with the former director beforehand. So don’t think: I can save money, I’ll just throw out an expensive supplier. Perhaps that is a close acquaintance with whom the family has done business for many years. Business-wise, something like that can be a good choice, but emotionally it’s not smart.”

It helps if an outside top executive does not have a very large ego, Eijssen says. “Of course, you have to be clear and straightforward, but a personal agenda and a need for proof fits family businesses very poorly. You have to put yourself at the service of future generations.”

Eijssen always compares a family business to a teddy bear. “The family doesn’t just hand you that bear. Because when you are attached to the company, you are attached to the family. The first time as top executive is not about big deeds at all. You have to gain trust so that the family dares to give you that bear. That is the most important thing to be successful.”