BLOOD IS THICKER THAN WATER

Steven Cesare, Ph.D.

An executive from North Carolina called me the other day with an update on the new CEO recently hired by his employer. Here is the back story.

About six months ago, the aging founder of a very successful landscaping company decided it was time to step away from his company. Even though he has three adult sons working in the company, the owner thought it prudent to hire an external replacement to bring new ideas into the homogeneous executive team, thereby exposing his sons to a real corporate work environment instead of maintaining a family-run business perspective. The sons agreed with their father’s stated wishes.

With that decision made, my executive-insider asked me to offer insight regarding this executive search process. Standard fare began at that point: company vision, desired qualifications, search firms, background checks, compensation packages, applicant assessment, and timeline. As the insider and I outlined our desired process, I reminded him the intangible aspect of entering a family-run monopoly was the key driver of success or failure. Despite my skepticism, the insider intimated the “boys are on board.”

True to form, the company executive team partnered with a search firm, reviewed candidate profiles, identified their top choice, negotiated a compensation package that started at $400,000 annually, plus bonuses, with relocation expenses, and ample benefits fitting a position of that stature. While I consistently suggested the insider demand the company develop an Executive Employment Agreement for the new CEO, the family members argued against it, declaring it as being too bureaucratic.

Once I was informed that the new CEO accepted the job offer, I repeatedly emphasized to my company insider that the patriarch and his sons would have to be very open to different ideas, systems, and contingencies from the new hire. I reminded the insider the new CEO would test the family members’ assumptions, question their decisions, and offer alternatives to positions they held sacrosanct for decades.

“Don’t worry Steve. The boys are on board.”

Serving only as an outsider in this process, I told the insider to prepare the family that ideological conflict was inevitable at the executive level, requiring them to adopt a professional level of receiving and sharing issuing feedback instead of their familial approach to interpersonal or strategic disagreement.

Likewise, I repeatedly told the insider that an executive on-boarding plan is vastly different from standard 30-day onboarding plans the company was familiar with. Indeed, it is not uncommon for executive on-boarding plans to span nine months, predicated on business conditions, budgetary terms, and myriad procedural issues (e.g., company culture, leadership team coaching, staffing changes).

As part of the standard pre-boarding process, the management team asked the new hire to submit his 6-month execution plan. His outline was sound: staff assessment, learn the success behaviors that define the culture, implement a safety program, learn and apply the budget, review key entities (e.g., customers, suppliers, consultants, and contracts) develop field standard operating procedures, hold field Department Managers accountable for achieving their monthly key performance indicators, etc.

After two months on the job, the new CEO proposed the company’s first organizational chart to the family.

The sons disagreed with his proposed structure. The patriarch supported his sons’ recommendation.

The new CEO was terminated during his fourth month in position.

When I asked the insider if there were any other personal, professional, or procedural issues that contributed to the new CEO’s prompt exit, he simply replied “Nope. That was it.” The sons instinctively interpreted the organization chart as an initial threat to their leadership authority.

To be successful, sooner or later, many companies must evolve from a family-run business to a team-based organization, especially at the executive level, even though “blood is thicker than water.”

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