Tuesday, August 16th, 2022

Evaluating the Strength of Your Family Business


Do you know your organization’s most vulnerable link?

At what job level is your practice or company most vulnerable? Different experts will give different answers to this question. I believe the lowest level of your management or leadership team is your most vulnerable link. This group, line managers— works closest to the client or end product. This is the point where the owner’s vision, mission and values are passed on to the employees closest to your client or product. The ability of the line manager to recruit, select, develop, maximize and retain talent is paramount to building a great organization. 


Other ways to evaluate the strength of your organization

Additional indicators of strength are your Per Person Profit and Per Person Production and the number of strong managers/leaders you employ. If you have a large sales organization, rank each salesperson in order of their productivity over a similar time period. Let’s assume you have eight sales people. Divide them into four quarters (quartiles), add up their personal productivity in each quartile and then divide their total production into each quartile to determine the percentage of the total they represent.

For example, assume there are eight salespeople and a total production of 800 units. The top quartile (two salespeople) produces 400 units. That means 50% (400/800) of the total productivity comes from the top quartile of the sales staff. If salespersons three and four (the second quartile) produce 250 units, then they account for 31.25% of total production (250/800). Combining the production of the top and second quartile shows that the top 50% of the sales force accounts for 82% of the productivity. Ideally, you want to see the sales production distributed more evenly over the total sales staff. A balanced production signifies depth in talent and that is a good way to be!

When you have depth in sales talent you will ideally see the productivity more evenly divided among the quartiles. If the top two quartiles (50%) account for more than 70% of the total, you may need to work on upgrading your sales team. This exercise can be done for any group of people who hold the same job position to get an indication of talent and performance depth.

 “The best executive is the one who has sense enough to pick good people to do what needs to be done, and self-restraint enough to keep from meddling with them while they do it.”                  —Author unknown


The irony of building a great organization

In a privately owned business, all managers/leaders need to be better skilled in leadership processes—recruiting, selecting, developing and maximizing talent—than their counterparts in large publicly owned businesses. There are a couple of reasons for this. Privately owned businesses and professional practices don’t have the resources that have been assumed by HR departments in larger companies. Often, the larger organizations forget these skills as their critical mass or size makes them seemingly unessential to their growth. In family-owned businesses, the people processes need to be more objective or they run the risk of placing a family member in a position where he/she will be detrimental to the success of the organization. The Bilco Company, a large privately owned family business, requires family members to apply for a position and it has been said by a key family member and executive that a family member may need to be more qualified than a non family member to gain a key position…

To get a copy of your unique role as a CEO of a family owned business- request the CEO Job Description at the top right of www.thefamilybusinessblog.com or email me at: bclinton@business-wise.com .

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