Talent management in family businesses

In 2014, Ana Botín took over the leadership of Banco Santander following the sudden death of her father, Emilio. Although some commentators have argued that this process suffered from nepotism, there is ample and shared evidence of Ana's aptitude. The way her father behaved may have contributed to this aura of competence: Don Emilio was always particularly demanding with his daughter (he even went so far as to fire her "on request" from non-family managers in the context of a merger project between Santander and another bank).

In talent management, as in other areas of his work as leader of the global institution that he developed with undeniable success between 1986 and 2014, the former patriarch of the Botín family seemed to believe that the secret of success lies in the careful integration of the family element in the running of the business.

Talent Management is the order of the day.

A famous article in McKinsey Quarterly dates back to 1988, in which the authors of the consultancy stated that companies are forced to view human resource management as a war for talent, in which senior managers seek answers to questions such as "why would a really good manager want to join my company?" or "how am I going to retain that staff for more than just a couple of years?"

More than a quarter of a century after the article was published, talent management is still a relevant topic, as can be seen from the results of a recent KPMG survey, where 418 leaders of multinational companies admit that talent wrangling will be one of their biggest focus topics in the near future.

Family Businesses must invest in Talent Management, for the most part.

If the theme is relevant - for more or less obvious reasons - for any organisation that aims to be successful, it becomes indispensable for a family business, where to the so-called obvious reasons we can add a set of particular considerations.

- Managing family talent is one of the pillars (alongside consolidating family assets and strengthening family unity) on which the sustainability of the family business over generations rests: when the family seeks to develop its members to be industrious, fulfilled, contributing individuals - whatever path they choose - it's investing in their future, because those people better understand their role in the system we call the 'family enterprise' (a broader concept than the family business itself) and will more easily find their way to contribute to the family's mission and goals.

- When not properly framed, the family element can be an obstacle to the management of non-family talent in the company: on the one hand, the spectre of nepotism (real or imagined) is one of the main reasons for mistrust for professional managers considering joining a family business; on the other hand, it's often family reasons that make family decision-makers feel uncomfortable about the possibility of looking for talent outside the family perimeter (can that person be trusted?).

- Talent management has a direct and decisive influence on one of the most critical processes for the survival of family businesses - succession: after all, choosing the person(s) who will replace the current leader of the business should ideally involve the combination of talents in various spheres (family, owners and management) and from different backgrounds (family and non-family).

In family businesses, having appropriate governance can be a significant catalyst for effective Talent Management.

When we talk about governance in the context of family businesses, we should think about the classic corporate governance - a set of objectives, structures, policies and activities that allow the management to act, ensuring that the company is doing good (in addition to doing well - the good comes here not so much as a moral concept, but as a synonym of what we can call the ultimate goal of a company: creating value for shareholders in a context of sustainability and respect for stakeholders) - but mainly about what we call family governance. Family governance, often attributed to the so-called family council, has the following objectives:

- help the family to set the direction and achieve the mission;

- support the family to maintain determination and unity;

- consolidate ties between family members, the business and other relevant activities;

- maintain family discipline in relation to the business and other relevant activities;

- develop loyal, informed, capable and contributing owners and family members (and who simultaneously value the added value contributed by non-family members at various levels. ).

Good family governance can leverage talent management on the three fronts mentioned above:

- at the level of family talent, for example through (a) structured investment in the education and development of family members in general and (b) the development and implementation of employment and remuneration policies for family members specifically involved in the business.

- at the level of non-family talent, for example (a) by leading the family to recognise the advantages of having professional skill-sets that complement the family's capabilities and (b) by the mitigating effect on possible perceptions of nepotism that can be achieved through the above-mentioned employment policies for family members.

- succession, namely by getting the family to think of it as a process rather than an event and to structure it with the support of qualified independent people (e.g. with the support of non-executive directors, who often provide crucial help).

These good practices are only some of those which constitute a wider panoply of tools available to those who intend to manage talent in their family business and have a family governance system.

In conclusion:

Talent management should be given special attention in family businesses, as this issue has some particularities in the context of these organisations. Investing in family governance is an essential step to overcome the challenge and ensure the sustainability of the family business over generations.

As I never tire of repeating, in family businesses the secret is to make the most of the family element, creating competitive advantages that companies without family influence are unlikely to replicate.