How to find the ideal CEO for a family business?

It would be ideal if there was a magic formula to find the perfect CEO that a family business needs. Although it is not impossible to achieve, it does require an open mind and a cool head to carry it out.

think of a family member as the next CEO is a natural consideration, since values, customs, ways of working and objectives are transmitted within a family business; however, that does not mean that the only answer is in the last name.

The question that many ask is: choose a person with experience or one with potential? The truth is that no one starts their working life as a CEO, or at least not in a way worth mentioning.

Every employee or manager has started at some point, some lower than others. And even so, when analyzing the profiles of those who could lead the company, the focus always goes first to who have already had experience at some management level, such as chief operating officers (COOs), a popular practice during the last decade of the last century. However, boards of directors are focused on what they do within opportunity management and how they adapt to market trends.

It would be a lie to say that skills and potential currently have more weight than experience when it comes to a management position, but there is an increase in this type of talent.

According to a Harvard Business Review study, in 2020 the majority of CEOs were formerly CCO (38%). However, CFOs were up 9% because their management helps ensure business continuity. And those who are making noise are called leapfrogssomething like “bulging” (like the frogs), which are those people who rise from positions like vice president or general manager, which are the 5 percent.

The curious thing about leapfrogs is that in this study they have the highest performance among the profiles: 41 percent, followed by COOs with 27% and CFOs with 25 percent. Here, then, we are talking about recognizing the potential of someone who has done a good job at their level and who could do the same at the head of the company. The matter is that both the Council and the members of the family dare.

Create an evaluation method with the help of experts

a method of assessment advised by experts will help the Board of the company and the family. With it, what the company needs for its optimal operation and growth will be established; It will also define how to measure the skills and characteristics that are sought in each of the candidates. At the same time, I recommend asking for opinions from colleagues not involved in the company, but who may have knowledge of the talent to be considered, always discreetly, in order to have real data from real cases.

And succession plan Well drawn up, I would include this as a section with availability to be updated, because the organization, as more time passes, will have to transform itself to continue in force. Like the profile of whoever becomes its CEO.

At the end of the day, what should not change is that, regardless of the chosen profile —internal, external, experienced or potential— this new CEO should respect and appreciate the culture of the family business, recognize its best practices in order to maintain and strengthen them, while looking to the future to take it where it needs to go, without fear of making difficult decisions.

*Mauricio Brizuela Arce is Chairman of the Board of Directors and Managing Partner of Salles Sainz Grant Thornton