April 21, 2021 – Prior to any action being taken regarding human capital in a family-owned business, a discussion about family objectives is not only valuable, but essential, according to a new report by Linda C. Mack, founder and president of executive search firm Mack International. Working with families is imbued in nuance. “Each family has unique needs, a unique culture, and like any family, a family office is made up of many individuals and may span multiple generations and branches,” Ms. Mack said. “Before a position profile can even begin to be developed, it’s important to step back and look at what the family is trying to accomplish over the next 15 to 20 years.”
This time invested up front is the cornerstone in laying the proper foundation. “Leadership roles, position descriptions and ideal candidate profiles must be clearly defined,” said Ms. Mack. “Only then will the family have the information necessary to develop the assessment criteria and process that will be used to identify and select candidates.” Mack International’s proprietary 360 assessment defines client needs and culture and enables clients to achieve the clarity, consensus and alignment regarding their collective vision and position.
Credentials vs. “Culture Fit”
Most family office searches fail because they don’t recognize a basic principle: A successful hire requires that the candidate not only have the requisite skills and competencies to perform the job, they also need to meet the culture fit requirements to be successful and effective, according to Ms. Mack. “In the family office world, culture fit will always trump technical expertise,” she said. “And that is for the incoming family office leader as well–it works both ways. In terms of potential candidates, the market is surprisingly limited so it can be a challenge to identify qualified individuals who can work in an ultra-specialized environment and culture for what can be a generation in time. Academic credentials, experience and accomplishments constitute but a subset of the selection criteria applied. It is of paramount importance that values, philosophies and other personal attributes that comprise culture fit match as well.”
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.
“Every family would agree that it is critical for them to successfully attract and retain the right leadership talent to enable them to achieve their long-term goals and objectives and to strengthen family sustainability,” Ms. Mack said. “But in the absence of a proven process, we see many of these searches fail.”
Various drivers affect family office compensation. Ms. Mack notes that these include size, complexity, family philosophy, the position, individual performance and geography. One of the biggest compensation challenges is the lack of good benchmarking market data. In 2015, the first family office executive compensation survey was published by Fidelity Family Office Services and Botoff Consulting. Since then, the Single Family Office Investment Professionals survey has become the most robust of its kind specific to family offices and family investment firms and was conducted to provide deeper insights and more accurate competitive information. “Successful family offices understand the critical role of developing a process before, during and after an executive search is embarked upon and the value of designing a compensation plan that drives behaviors leading to results aligned with family objectives,” said Ms. Mack.
Commitment to Onboarding
Commitment to the success of the new leader and creating an environment to foster success is critical. “An onboarding plan is designed to help the new leader become acclimated to their role, the family and family office culture, and to the family’s advisors,” said Ms. Mack. “The goal is to help the new family office leader build relationships and achieve results quickly and effectively.”
Performance expectations and metrics must be aligned with family philosophies, values and objectives and used to evaluate success in a manner that is objective, results driven, quantitative and qualitative. “They must be mutually agreed upon and clearly communicated,” said Ms. Mack. “Ongoing, open communication and feedback regarding performance is critical. Retention plans, and succession plans should never be overlooked or taken for granted.”
“Families are typically looking for someone who can assume a leadership role for 15 years or longer. And when it spans that length of time, it becomes a very personal relationship,” she said.
Having a well-defined, comprehensive process to identify, recruit, assess, hire and onboard the ideal candidate is essential. “Combined with strategic compensation and retention strategies—the new leader’s ability to succeed grows exponentially,” said Ms. Mack. “Tenures of senior-level professionals for family offices tend to be longer as opposed to traditional corporate positions. Therefore, the identification and vetting process becomes hyper critical. Coupled with what is already a narrow field of candidates who are best qualified for these ‘expert generalist’ head of family office positions, it truly requires a proven method to bring all the elements together.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media