This document discusses managing talent, both family and non-family, in family businesses. It begins with an agenda covering managing talent, a case study of the Darley family business, and creating a supportive environment for non-family employees. It then addresses challenges such as the glass ceiling for non-family professionals and managing family talent. The document provides ways to create a beneficial environment for non-family managers, such as involving them in planning and offering compensation comparable to industry standards. It also discusses reasons a family business may consider hiring a non-family CEO or non-executive director. Finally, it stresses the importance of talent management in family businesses to avoid issues like high turnover.

1. Talent in the Family Business: the
role of non-family members
Dr Eric Clinton

2. AGENDA
• Managing Talent
• Case Study: Darley Family
• Supportive Non-Family
Environment
• Non-Family CEO
• Non-Family Director
• Compensation and Benefits

4. Something to Think about….
• How can owner-managers motivate top executives who
realise that the firm’s prime leadership position are likely to
go to family members?
• How can family companies retain such executives, who could
go to another company where they could likely earn more and
have a more clearly structured job in which achievement itself
is a key motivator?
• How can family-business leaders motivate nonfamily
managers without allowing them to participate in setting the
direction for the business?
• How can owner managers ensure the loyalty of nonfamily
employees in the absence of equity participation?

6. So what do we know?
Owning Families
– Family Relationships
– Successor Development
– Estate Planning
– Succession
– Wealth Transfer
Little Known
– Managing relationships between family and nonfamily
managers

7. Non-Family Managers
Advantages to working in a family business:
• Organisational Culture
• Personal relationships with owner/family
• Job security- long term investment outlook
• Speed of decision making
• Levels of bureauacy

8. A unique set of Challenges
• Glass Ceiling on Nonfamily Professionals
• Dealing with the Old Guard
• Integrating New Hires and Long-Serving
Employees
• Respecting Processes Versus Intervening at Will
• Managing Family Talent
• Managing Talent During Transitions
• Finding Talent in Order to Pursue Growth
Ambitions

12. Managing Family/Business Dynamics
‘The third generation of owner-managers is in the
wings, and my affiliation is with the second generation.
In less that 10 years, I may have to let go, if the second
generation retires or lessens his role. You see, I am
having to ‘discipline’ or be the bad guy, by supervising
two of the next-generation family members. And what
if I end up having to work for them? I would still need to
work; I have two young kids’

14. Can both family and nonfamily managers
enjoy the prospect of career opportunities
in the future?
THEY MUST

15. What’s the Risk…..
• High turnover
• Low morale
• Inability to recruit top notch managers
• Inability to set benchmarks for family
managers
Merit based and professionally run family-
business culture is essential……

16. Ways to Create a Beneficial Environment for Non-
Family Managers (1/2)
• Build family/nonfamily management teams with
complementary skills at the top and set clear benchmarks
• Discuss career opportunities- and the impact of succession
• Involve nonfamily managers in business planning and
succession planning
• Offer compensation and benefits benchmarked to others in
the industry- equity ownership or a phantom stock
• Use performance measures-scorecards-to build motivation
– Revenues, profit margins, market share, other financial information all
great motivations
• Hold meetings regularly between key nonfamily managers
and shareholders- mutual understanding

17. Ways to Create a Beneficial Environment for Non-
Family Managers (2/2)
• Educate the entire family, whether active or inactive in the company, about
business and management in order to create common ground between family and
nonfamily members.
• Survey nonfamily employees periodically- work climate- healthy or requires
attention.
• Emphasise nonfamily contributions to the family business. Making nonfamily
employees part of a successful family in business builds a culture in which people
truly are a competitive resource.
• Treat family members like employees at work. e.g Call by professional names,
require they follow employee policies and rules, expect just as much from them as
you would a nonfamily manager.
• Use advisory boards or boards of directors with independent outsiders.
– Business run with merit and not blood
• Develop a family constitution- spells out policy on family employment and family
business relations
• Hire high- caliber key nonfamily employees to be bridging presidents or full-term
CEO’s of the corporation and business mentors of the family shareholders.

18. CEO-parents provide the next generation
with little or no feedback on their
performance because they find it difficult
to stop wearing the ‘parent hat’….

19. Non-Family CEO
Reasons to consider a nonfamily CEO:
• Choosing among children
• No successors are qualified to carry out the chosen strategy
(e.g. global).
• Potential successors are too young or are not quite ready for
job.
• Future focused CEO, not the past.
• Business needs dramatic change. Emotional attached (-)
• Family sees need for change- but desire a transformational
nonfamily CEO to an outright sale of the company.

20. Non-Executive Director
4 Key Areas of responsibility:
1. Strategy
2. Performance
• Meeting set goals, monitor performance reporting
3. Risk
• Financial information is accurate
• Risk management is defensible
4. People
• Remuneration
• Prime role in appointing senior management
• Developing succession plans

21. Non-Executive Director
• International experience
– FB’s low staff turnover
• Independent objectivity
• Source of innovative ideas
• Specialists expertise (e.g. networks)
• Industry wide connections
• Objective guidance- strategic issues
• Family disputes
• Succession planning
• Moving meetings from informal to formal
• Corporate governance standards

22. Incentive Arrangements
• Only the Family- outsider will not share our aspirations,
values and familiness
• Rewards- Cash bonuses or Equity
• Share options
– Share based rewards (e.g. 3-5 years)
– Pre-emption rights
– Drag along rights
– Tag along rights
– Non-voting status
– Forfeiture provisions
– Vesting
– Liquidity

23. Conclusion
• Talent Management in the Family Business unique
set of challenges
• Darley Family Business
• Ways to Create a Beneficial Environment for Non-
Family Managers
• Reasons to Consider a (i) Non-Family CEO, (ii) Non-Family
Director
• Compensation and Benefits to Non-Family Managers

24. National Conference
Title: Talent in Family Business- attracting, nurturing and retaining family
and non-family employees
Date: Tuesday 12th April 2016
Times: 7.30am - 2pm (including lunch)
Venue: The Helix, DCU
Keynote: Mr Jim Ethier, 3rd generation family member of Bush Brothers &
Co (USA)
Conference topics:
• Attracting and retaining best talent in your business;
• Staffing family businesses: the complexities and challenges;
• Options for family members’ involvement;
• Best practices on how and when to get non-family involved as
management and executives;
• Building a business culture based on family values.

26. Thank You

27. +353 1 700 6921
Get involved with the
DCU Centre for Family Business:
www.dcu.ie/centreforfamilybusiness
familybusiness@dcu.ie
@DCUCFB

28. References
Glynn, N. (2011). Planning for Family Business
Succession. The Varsity Press.
Poza, E. (2013). Family Business. Cengage Learning.
Schuman, A.M. (2011). Nurturing the talent to nurture
the legacy: career development in the family business.
Palgrave Macmillan.