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NewsBriefs: IMD and Lego; New family office hiring report; Law firm warns on family office direct investment

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IMD and the Kristiansen family collaborate on innovation initiative

The LEGO Brand Group, owned the Danish Kristiansen family, has launched a joint research project with Swiss business school, IMD. 

The management and innovation research initiative includes the establishment of a new research centre and is supported by a multi-million dollar grant from the family group.

Forming part of the existing Centre for Future Readiness at IMD, the initiative measures how prepared businesses are for challenging times. According to previous statements from the business school, the research is intended for practising managers in the business world.

The project builds on twenty years of collaboration between IMD, which also has its own family business learning and research centre, and the Kristiansen family. Kjeld Kirk Kristiansen, a third-generation family member and former group CEO, holds an MBA from the university.

The Family Office Association sheds light on hiring talent in a new report

The Family Office Association, a global community of single-family offices, has released a new report on hiring staff. 

The findings outline several steps to help family offices fill top roles to facilitate their financial sustainability. The first step is re-examining their mission, purpose and long-term objectives before hiring as this will have an impact on what talent is needed. The second is hiring for a culture fit over perceived skills and qualifications. Apart from wasted recruitment costs, the report adds that a bad culture fit can do damage to a family’s objectives and legacy.

The report suggests that family offices should deploy the same tests to all potential hires whether they are family or non-family members. These should include behavioural interviews and assessments, which will help determine whether someone is a good fit for the organisation.

After making successful hires the report says a retention plan is essential for holding on to talented staff, adding that an absence of leadership and a lack of goal setting and tool provision can cause them to leave.

Family offices should remain wary of direct PE investing, says law firm

While family offices have increased their private equity allocations, new analysis from law firm, Norton Rose Fulbright warns that it isn’t always a safe investment.

Family offices may be lured into direct investing by the promise of high returns, but they must overcome information disparities in identifying and evaluating targets including “determining price and measuring risks,” says the report. There’s also a crowded investor marketplace to contend with including competition with fund sponsors, the report added

But this shouldn’t deter family office with the necessary “capacity” from engaging in direct PE investing, it adds. For example, entrepreneurially minded family office principles are more likely to make good investments and identify opportunities by drawing on their networks.

The report also says fund sponsors have more red tape around potential investments and require investment committee approval before making allocations. With sponsors being more “risk-averse”, family offices could stand to make more dynamic direct investments.

The report says that family offices can implement similar structures to traditional private equity sponsors to become more successful direct investors. This includes establishing the right team and bringing “talented and experienced” private equity managers onboard.

 

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