Building An Effective Executive Team

The question of "who's in charge" can be particularly confusing in family businesses, yet it must be answered if the business is to prosper.

The question of "who's in charge" can be particularly confusing in family businesses, yet it must be answered if the business is to prosper. Increasingly, we are seeing that the "who" is a team or partnership rather than one single individual. There could be a husband/wife team (particularly in a business that is just getting started) or a sibling or cousin team that takes over when the previous generation leader retires. While the model of a single leader (typically a father) can and certainly has worked well in many settings, a well-functioning executive team or partnership has the potential to provide even greater strategic and operational horsepower.

The challenge for a team of family members at the helm of a business is to learn to accomplish what all strong executive teams do:

  • Develop a method of decision-making about key business concerns;
  • Use team member resources and talents wisely;
  • Represent the company to its customers, stakeholders and the community;
  • Determine the policies and practices needed to guide operational and personnel decisions; and
  • Make a shift from thinking primarily about the success of work by an individual or department to developing a sense of stewardship for all facets of the business.

As an example, one client my company is working with is a team of two siblings and a first cousin who have recently inherited the business from their parents. Though they have all worked together for several years, the experience of leading the business as a team is very new to them. After several instances of miscommunication, bad feelings and missed business opportunities, they have begun to meet together on a more formal basis (as compared to trying to make decisions at the water cooler). They have also begun to question and at times actively challenge each other's management styles, and, perhaps most importantly, to define a method for reaching consensus.

Equally important, successful executive teams must respect the fact that what and how they communicate about their work to others has considerable impact on the way work gets done. Vague decisions lead to vague outcomes; unresolved conflicts among team members may set up conflicts among the units and departments that report to them. It is not unusual for arguments to erupt among employees at lower levels of an organization because the leadership team has refused to acknowledge or resolve the difficult issues themselves. For example, in one organization we've worked with, the executive team members were complaining about conflicts between the sales and production areas. This is a fairly typical conflict within many organizations, yet as we explored ways to resolve it, it became clear that the family member in charge of the sales group was extremely frustrated with his cousin, who managed the production crew. When they were able to negotiate their responsibilities and differences more clearly, the tensions between their departments eased up as well. The reverse can also occur; employees can avoid conflict and the executive team members can find themselves arguing intensely about issues they may actually know little about. For these reasons it is crucial for leadership teams to take the time to work out their differences, involving employees in their evaluations when appropriate, and then to be clear and consistent about their recommendations for action.

Of course this is easier said than done. Conflict is often heightened when family members work together as an executive team since members interact with each other frequently about a wide range of family and business issues. This means that the team must figure out how to separate differences of opinion about the business from differences based on long-standing conflicts within the family. Ivan Lansberg, a well-known consultant, tells a story about one of his clients, a complex family enterprise run by four brothers. Accustomed to arguing as children during long family car trips, the brothers now jump in a car and drive around until they can resolve their disagreements!

There are trade-offs with every leadership model in every business. In many family organizations, the boss typically works as if he or she is the hub of a wheel, coaching the individuals who report to them to do their best work. While this helps keep things under control, it also limits the extent to which team members can work flexibly across departments to focus on shared business needs. With a team, there are some real advantages to solving problems together, but the intensity of meeting together and sharing responsibility can also lead to a stalemate (and at times to a real crisis for the family). The challenge is to find the leadership model that assures that the business can continue to function effectively.

As family members leading a business manage their relationships and their work together, and particularly as sibling partnerships and teams take hold, it is a good idea to take the time to build an effective executive team. By developing their skills as leaders and as team members, family members can discover new and exciting ways to address business challenges. Team building can be a significant event in the life of a business and of a family—easing tensions, increasing loyalty and setting the foundation for the future.

Reprinted with permission from The Family Business Report sponsored by the Goering Center at the University of Cincinnati College of Business Administration.