Two studies show the growing value – and shortages – of outside managers for family businesses

(photo: Pixabay)
(photo: Pixabay)

Pablo Isla, the CEO of Inditex, a business owned by Spain’s Ortega family, is the best boss in the world, according to the Harvard Business Review. JAB Holding, an investment group owned by members of the Reimann family, but run by non-family managers, is one of the most successful investment groups in the world and has just won Family Capital’s investment company of the year for 2017.

These family enterprises have excellent non-family managers that have contributed to their success. Given these examples of great management, no wonder the demand for talented managers at all levels of family businesses is rising faster than ever, as two recently released studies underline.

The demand for outside talent to run family businesses might have been strong for years at the big family enterprises, but now that demand is being replicated at smaller family firms, according to a study Italy’s Bocconi University. In its annual AUB Observatory study of the country’s family businesses, Bocconi found that Italian family business with a turnover of between €20 million and €50 million, more than 23% had moved from a family leader to a non-family leader.

“These are already significant numbers,” says Guido Corbetta, one of the authors of the report and a professor at Bocconi. “This phenomenon is following on from the process already started by the bigger family businesses, which has paid off for them in terms of their success.”

Although the study showed the trend in Italy, the popularity of outside managers at family businesses across the world is rising. And that’s no doubt contributing to a war for talent, which is a growing issue for many family businesses, according to KPMG, the professional services group.  

Its annual European Family Business Barometer found the biggest issue for family businesses was their ability to attract and retain the skills. “Make no mistake, this is a critical business issue, as without the right skills in a business it will struggle to deliver on its potential and to grow in a competitive market,” says Ken McCracken, KPMG’s UK head of family business consulting.

The war for talent was viewed as a bigger concern for family businesses than increasing competition and declining profitability, according to the study. After all, there aren’t too many Pablo Isla’s out there…