Idea in Brief
The Problem
Family-owned and -controlled businesses play a critical role in the global economy. But as a result of poor talent management, many fail to thrive or even survive.
The Research
In search of best practices, Egon Zehnder and Family Business Network International interviewed executives and studied recent leadership transitions at 50 leading family firms around the world.
The Solution
They found that top family-led companies do four key things: establish a baseline of good governance, preserve “family gravity,” identify future leaders from within and outside the family, and bring discipline to their CEO succession.
It’s no secret that family businesses can struggle with governance, leadership transitions, and even survival. Consider a few high-profile examples: Banco Espírito Santo was rescued by the Portuguese government last year following the resignation of its CEO, the great-grandson of the bank’s founder, amid allegations of financial improprieties. The Doosan Group, a South Korean conglomerate, was thrown into turmoil when the clan that runs it replaced one brother with another in the chief executive role. Fiat, the Italian auto group run by the heirs of Gianni Agnelli, went through five CEOs and three chairmen in two years before bringing in an outsider to lead it. And in the United States the New England grocery chain Market Basket faced employee protests and lost $583 million in sales as two cousins—one a board member, the other the chief executive, both grandsons of the founder—publicly vied for control of the company.