Seven Steps to Successful Family Office Hiring

In a new report, the Family Office Association provides an invaluable guide to the process of finding, hiring and retaining executive talent. It starts with establishing a foundation for success, helps you navigate the recruitment process, offers tips for retaining your new talent, and everything in between.

September 2, 2020 – With all of the unique challenges that running a family office pose, it is imperative that families attract and retain the right executives for key leadership roles in the organization. Doing so enables them to achieve their long-term goals and objectives and to support family sustainability. Without a proven process, however, many such searches fail, says a new report by the Family Office Association, a global community of ultra-high net worth families and their single family offices. And that failure, in the end, can be extremely costly to the family both financially and in terms of sustainability.

The report, “Recruiting and Retaining Top Leadership Talent,” by Linda C. Mack, founder and president of executive search firm Mack International, laid out a process of seven time-tested, sequential steps that lead to successful hires. “The process described here has been proven to work for over 15 years – but will only succeed if followed completely and sequentially,” said Ms. Mack. “Taking short cuts or cutting corners will not produce success and in fact may lead to very costly failures. Following the process consistently as prescribed will ensure the family can indeed get it right the first time, every time.”

1. Foundations for Success – “Before creating a family office, it is important that the family first take the time to define their overarching vision for the future and the mission, purpose, goals and objectives for both the family and family office,” said the report. “Some families think in terms of a generation or multiple generations; others take a long range view of 50 to 100 years; and, some plan for perpetuity.”

“These foundations need to be clearly defined, and family consensus and alignment around them achieved, before the family proceeds to develop their strategic human capital plan and begin recruiting,” said the study.

The key foundations for success require family offices to: define family mission, vision and values, define purpose of the family office (short and long term), define family and family office long term objectives, determine which family members are to be served as clients of the family office, determine the scope of services to be provided by the family office, and decide which services to provide in house vs. outsourcing.

“It is important for the family to define the clients to be served by the office, the scope of services to be offered and the services to be delivered in house versus outsourced,” said Ms. Mack. “These factors have a significant impact on the business plan, organization structure, staffing and cost of the office.”

Linda C. Mack is the founder and president of Mack International, a boutique search firm that specializes in providing recruiting and strategic human capital consulting services to family office/enterprise, wealth management and investment industry clients on a national and international basis. Family office clients range from first generation business owning wealth creators to multi-generational families of six or more generations.

In addition, there must be clarity, consensus and alignment around all of the foundations amongst the family constituents to be served by the family office. “If there any gaps or differences in opinion, these must be addressed at this stage before moving forward,” said the report. “Failure to solicit input and feedback from all constituents and gain consensus can lead to a number of negative consequences (e.g. having to start over again, disagreements and conflicts, risk of losing family members/branches).”

2. Human Capital Plan – This revolves around creating the position description and an ideal candidate profile. “Defining the personal characteristics and attributes, values, behavioral characteristics, decision making and interpersonal style, and other motivators needed to ensure a good ‘culture fit’ with the family are also essential as part of this process,” said the report. “Getting the ‘fit’ right is critical for success and effectiveness.”

“In our experience, finding a candidate with the requisite skill, experience and qualifications for a position is the only the ‘first cut’ on a search,” said Ms. Mack. “Ninety-five percent of the search is culture fit. If the culture fit is not on target, neither the candidate nor the family will be successful.”

 “While it is tempting to shortcut or skip this part of the process, investing the time to carefully define the position AND culture fit requirements is the only way to ensure success,” said the report. “The wrong hire can cost much more than money; it also causes wasted time and potential derailment of the family mission and legacy.”

3. Assessment Process – Once the family has completed the human capital planning process, including the definition of leadership roles, position descriptions and ideal candidate profiles, they have the information needed to develop a comprehensive assessment process that will be used to identify and select candidates.

“Each family is unique, so the criteria for fit will be unique to each family,” said the report. “There is no industry standard for assessment criteria.”

The first step is to define selection criteria consistent with the position description, ideal candidate profile and culture fit requirements. The criteria will also enable candidates to be consistently assessed both in an absolute sense against the requirements as well as in a relative sense – bench-marked to one another.

 For consistency, and to identify the best candidate, it is important to use the same criteria and process to evaluate all candidates – this includes internal and external candidates as well as family and non-family candidates.

“Proper assessment is critical to making the right long term hire decision. Families who do not have an effective assessment process have a high risk of failure,” said the report. “In other words, if you do not know what you are looking for or how to assess whether you have found it, you cannot succeed. If you do succeed, it is only a fluke and not repeatable. A family cannot rely on a miracle to occur. They need a process that can produce a reliable, consistent and successful outcome.”

Among the most effective assessment tools available are: structured interviews, behavioral interviews, open ended questions, behavioral assessments, evaluation forms, and case studies/ presentations.

4. Recruiting Process – Recruitment can include an internal selection process and/or external executive search process, said Ms. Mack. An effective search process will include the following:

Search Strategy and Candidate Engagement Process — This involves: market research; search and candidate target strategy, which includes creating the “target pool” of potential candidates to be approached; and finally contacting and screening the “target pool.

Interview, Assessment & Selection Process — Once potential candidates have been sufficiently screened, it is time to implement the formal interview and selection process. Candidates should be assessed using the tools and assessment criteria described on an absolute and relative basis.

Related: Getting on with Hiring in the Face of a Crisis

Negotiate Employment Offer – Once the final candidate has been selected and compensation and other employment terms agreed upon, an employment offer is typically made contingent upon satisfactory professional reference and background checks. Some families may do preliminary referencing prior to the offer being made, but it is crucial that the candidate’s current employment situation never be compromised.

5. The Onboarding Plan —“Onboarding is designed to help the new leader become acclimated to their new role, to the family and family office culture, and to the family’s advisors,” said the report. “The goal is to help the new family office leader build relationships and achieve results quickly and effectively. Creating early wins for the new hire promotes credibility. Commitment to the success of the new leader and to creating an environment to foster success is critical.”

 New Ways to Retain and Hire Talent in the Midst of a Crisis
Many of you are gathering around your management table (virtually), grappling with how to get through these next few months and trying to imagine what is ahead. As you do, your organization may be faced with difficult decisions about cutting budgets, hiring freezes, furloughs and potentially letting people go. A new report by Aspen Leadership Group’s senior consultant Don Hasseltine offers fresh ways to assess, rethink and reset during these challenging times.

6. Performance Management Plan – “An effective performance management plan defines expectations and metrics to be used to evaluate success that are objective, results driven, quantitative and qualitative,” said the report. “Performance expectations and metrics must be aligned with family philosophies, values and objectives. They must also be mutually agreed upon and clearly communicated. Ongoing, open communication and feedback regarding performance and achievement of goals and objectives is also critical. Solving an issue and getting back on track quickly is the best way to avoid creating a chronic issue that could result in failure.”

7. Retention Plan – “The importance of a retention plan should not be underestimated,” said Ms. Mack. “An incredible amount of time and effort has been spent to identify and recruit a talented executive. It would be a catastrophe to lose the executive for lack of an effective retention plan. Retention cannot be taken for granted.

The Family Planning Association offered the following best practice components of an effective retention plan: a clear business mandate, authority and resources to achieve goals, personal and professional growth opportunities, competitive compensation and reward systems, smooth family leadership transitions/succession, and sound governance

“A clear business mandate combined with the authority and resources to achieve the mandate are essential,” said the report. “A nebulous mandate or frequently changing objectives will cause a high level of frustration that may lead an individual to consider leaving. Lack of authority or resources commensurate with accountability also create a retention risk.”

“Retaining a high performing executive requires providing learning and growth opportunities,” said Ms. Mack. “While this can be a challenge for family offices, it is important to invest the time to create development opportunities that will keep the executive stimulated and enthused. Many family offices, for example, have placed executives on boards or have involved them in strategic philanthropic initiatives. The key is to understand what motivates the executive personally and professionally, and to be creative about developing initiatives to successfully engage them.”

Related: Disruptive Shift has One Sector Looking Far and Wide for Talent

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor  – Hunt Scanlon Media

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