Does being a family CEO make a difference?
For family-owned businesses, the natural assumption would be their leaders work even harder than other CEOs as they have a much bigger stake in the organisation. The success of the company is often inextricably linked to the success of the family itself, and these ties that go beyond the corporate sphere should serve as ample motivation.
However, a new study conducted by a trio of top American universities suggests otherwise – and that CEOs of family-run businesses actually work less than the average manager. Researchers from Harvard Business School, the London School of Economics and Columbia University assessed the work schedules of over 300 CEOs in India and found that, on average, those in family businesses worked 8 per cent fewer hours than “regular” CEOs.
The study was concentrated on respondents from developing countries, including Brazil, but the researchers extrapolated the results and found similar differences in countries such as France, Germany and the US.
Raffaella Sadun, a Harvard strategy professor and one of the authors of the study – entitled 'Managing the Family Firm: Evidence from CEOs at Work', said that these findings were surprising given that longer working hours are often associated with competitive advantages such as productivity and growth.
“Family CEOs are a very interesting group. On the one hand, it stands to reason that they should be super-motivated to work hard because whatever they do for the company adds to the wealth of their whole family,” she was quoted as saying in a January 27 article in Harvard Business School Working Knowledge.
“On the other hand, a CEO's incentive to perform is in large part tied to what happens when he or she does not perform – a risk of getting ousted.”
She added that the complex nature of these businesses, in which the board is made up of family members, only adds to the issue – with implications on crucial business strategies such as succession planning.
Choosing the right person to next take on the reins is an especially important consideration for family businesses, as there are close emotional and genetic ties involved. Consulting with a change management strategist can help these organisations make the most informed decisions when undertaking these projects.