Interim Management in a family business

The unique character of a family business

Let’s start by clearing something up: there’s no such thing as a typical family business. Each family business has its idiosyncrasies, unique factors for success and its difficulties. For example, a lot depends on the phase in which the business finds itself. The manager-founder is often the entrepreneur par excellence: it was his/her initiative, commitment and money that led to the business being set up. In this phase, the company demonstrates unity of command. It makes decision-making easy, which means you can act quickly. Inevitably, the personal identity of this entrepreneur coincides with his or her professional identity. Personality traits such as daring, work ethic, a focus on results and creativity are often the keys to the company’s success.  

This dual identity is a strength but could potential be a weakness too. There is the impression that the manager is doing everything right and doesn’t need any advice or support, especially when a (relatively new) business is doing well. There is a risk of being (or becoming) blind to the things that may not be going so well, or to the threats that are lurking around the corner. In this case, advice from a banker or accountant is gratefully received but openness to other, external views is often rare. Of course, this also means that in such situations, there is no room for an interim manager. Even if the need exists, the mandate the manager is willing to propose may be insufficient. However, using a freelancer for an ad hoc task, for example, is a more realistic possibility.  

The impact of a generational change

The situation does not change immediately even when the second generation enters the picture. The manager and his/her family discuss business at the dinner table, keeping the line of command very short. However, there is a real chance that the founder may well be challenged more often by future successors. Without generalising: there is a danger that a degree of conservatism may gradually creep into policymaking. As a result, the company may miss out on an innovative move or lag behind in adopting new technology, eventually starting to lose its position. The younger generation is often more alert when it comes to these matters. The topic of sustainability (ESG) may be more likely to be picked up by young people. Does an interim manager come in at this phase of the business? It’s quite possible. If so, the focus of the assignment is likely to be more operational in nature, aimed at solving a particular problem. The manager will want to keep control of the company firmly in his grasp. This means the interim manager’s mandate remains rather limited.

Another way of involving external perspectives in the family business is an Advisory Board. As Jan Oosterlinck rightly points out, family businesses would do well not to wait too long before installing one. It is healthy to discuss the company’s strategy and development, also with well-meaning and committed external stakeholders. As long as the Advisory Board is not made up of family members or friends who aren’t able to adequately distance themselves (emotionally) or don’t dare antagonise the manager. A critical eye is fundamental to the Advisory Board’s role, in addition to support and advice in areas - technical, financial, IT, etc. - that might be a blind spot in the family business. 

In many cases, difficulties crop up when the business enters the third-generation phase. At this point, unity of command no longer exists and disagreements are common. Visions may no longer be aligned. For example, when one branch of the family wants to consolidate while the other is keen to go all out for growth and expects to invest. Again, the support of an advisory board or board of directors is of great value here. It usually manages to ensure the focus stays on the business and to avoid distractions from family frictions as much as possible. It is much more likely that an interim manager will be involved in this phase. The company now employs a lot more staff than family members alone and is often a more structured organisation with clear roles and processes. And if this is not yet the case, it is most definitely something an interim manager can help with. 

The added value of an Interim Manager

Having said that: Apart from the phase a company find itself in, scale also plays a role in whether or not interim managers are used. Moreover, there are of course special cases in which an interim manager can prove his/her added value, regardless of the scale or phase involved. Such as keeping a company on track when the manager has stepped down for medical reasons or bridging the period until the next generation is ready to take over general management. Another possible situation is when the interim manager fills the role of someone who has left the company precisely when a sale is planned, when a new permanent hire is no longer opportune.

As an organisation grows and matures in its operations, it is often more open to working with external parties. This may be in periods of development as well as in times of challenges. Let’s briefly consider two real-life examples. After the sudden death of one of the founders, the two branches of a family were at war. The interim manager had to work hard to reverse the negative spiral the company had fallen into. Or another situation in which problems facing a promising industrial company became unmanageable for the owner. The advisory board noticed that he ‘fled’ into the R&D department and refused to acknowledge the deteriorating situation in his company. They were able to convince the manager to temporarily step back and give an interim manager the mandate to steer the company through the turbulent waters. With decisive policies but always consulting with the owner-manager, it came to a point where the owner took back control with enthusiasm and a new perspective. 

When selecting an interim manager for a family business, it’s basically about matching personalities and the cultural fit. Working in a management role in an SME and especially in a family business is different from working in a large corporation in many ways. It mainly boils down to the dynamics rather than professionalism. The immediacy, speed and agility of a family business is something a large company can only dream of. You won’t find the politics typical of larger organisations there either. The impact you can have on the operational affairs of a family business is so much greater than in a corporation where all responsibilities are highly compartmentalised. On the other hand, as an interim manager in a family business, it is always best to remember that you are there by the grace of the family, regardless of the importance and added value of your work. This is closely intertwined with another ever-present factor: the money you work with is their money.  

So it requires the interim manager to demonstrate a lot of understanding and empathy to be able to get the job done. But with the head held high, a clear view of the interests at stake and the same decisiveness as the family, working in a family business can be very rewarding for an interim manager. It is not always a bed of roses but for those who do a good job, the gratitude received is often more pronounced than in a larger company.