When is an outsider right for a family business?

Stephen Brooks

Financial Times

5 September 2012

THE PROBLEM

Last week, the Ricard family said it would resume executive control of Pernod Ricard when the CEO, the only professional manager it has had, retires. When are family-owned companies best run by family members, and when should they have an outsider?

THE ADVICE

There is no reason why family members will make better or worse leaders than professional outsiders. What matters is their capability, experience and values.
A business that limits senior roles to a single family risks fishing in a small pond, which may not create the breadth of talent required to master the complexities of a modern business. All businesses need to innovate and new ideas are more likely to come from diverse leadership with different experiences.

Conversely, recruiting an outside professional to run a family business has its own challenges. It means finding someone who shares the family’s values and is comfortable working in a family environment.

Stephen Brooks is a specialist in people management and organisational change at PA Consulting Group.

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