Today, we are continuing our article series with a brand new episode! If you missed the other episodes, here is the link, link and link.
It is a weird topic to write about, but I did some research so... Anyways, we are here to broaden our vision! I am not limited to boring textbook info and can explain other things in a fun way if you want... I HIGHLY RECOMMEND YOU TO READ EARLY EPISODES!
Family and Professional CEO: Which One is More Appropriate? In What Conditions?
The family and ownership dimensions are the two legs of a coffee table which effects the family business’s efficiency, profitability, and continuity. Steps of these dimensions have potential for several problems which private companies are immune but could affect the family business thanks to the family component. The management type of company will be affected by these problems or be the source of a problem or successfully manage the problems. As a negative effect, the origin of the family CEO’s tendency to nepotism lays on the family dimension. However, the origin of the insist of the family CEO on the long-term success also lays on the family dimension. Therefore, the ownership and the family dimensions are parameters to analyze the main question: “Who could manage the family company better: a family CEO or a non-family CEO?”. Unfortunately, the complex and non-uniform structures of the real-life examples of the stages of family and ownership dimensions make it harder to analyze the cases and relate the results as a success of the CEO types. However, the business dimension has more distinct phases and can be classified easily. The data obtained by family companies at different stages on the business dimension can be interpreted to analyze the success of family and non-family CEOs and can be compared to identify strong and weak sides of the CEO types. Then, an answer can be given to the questions: should the company need to hire a professional CEO or when the company needs to hire a professional CEO.
The success of a family business always starts with strong family values and commitment; thus, a family CEO is the key to the success during establishment. The continuity of the success has additional needs, and professionalization is the crucial one. A non-family CEO provides an advantage to the family company at the professionalization period because of its managerial abilities, talent pool management and experience. Positive effect of a non-family CEO does not last long and ones the transformation of the company is completed, it slowly decreases. The family CEO’s commitment to the family and motivation for long-run targets make it more successful when the company is mature. So, the requirement of professional CEO to the family company can be explained by position of the company on the business dimension of the family business lifecycle coordinates. The management of a family business can be performed best on the hands of a family CEO in the periods of establishment and when the company reaches maturity; however, the talents of a professional CEO is needed to reshape the organizational structure of the company during the expansion period.
OK, let's stop here for now. The topic will develop further and I ensure that you will gain a different perspective. When you are tired of the bad news about crypto, come here.
