It can sound straightforward when a company decides to bring in a managing director from outside the business. It needs someone with the right experience, the right leadership level and the right understanding of the company. But in owner-managed and family-owned businesses, the decisive question may lie elsewhere: Is the owner ready to let someone else take charge?
That question can become visible very early in a recruitment process. A strong leadership candidate listens to more than what is said about strategy, growth and responsibility. They also notice who speaks, how decisions are explained, and whether the role feels like a real managing director position or a job where the owner will still remain close to the most important decisions.
For many of these businesses, this is not about resistance to change. It is about the company being closely tied to the owner, the family and the history behind it. The business may have been built over many years and protected through both good times and difficult periods. That can make it hard to make room for an outside leader, even when the company needs exactly that kind of person.
Losing interest
Christina Hansson and Isabell Hansson run the recruitment firm Hansson Management, which works particularly with owner-managed and family-owned businesses. They are themselves mother and daughter in a family business, and therefore recognise many of the considerations that arise when responsibility has to be passed on and new people are given central roles in a company.
- It is their little baby, and it can be difficult for them to hand it over and trust that others can carry it forward in the way they want, says Christina Hansson.
That sentence captures one of the central challenges in the search for strong managing directors. If the owner holds on too tightly, the candidate will sense it. And if the incoming managing director begins to doubt the role, the company may lose someone who could otherwise have helped move the business forward.
- A red flag can be micromanagement. We find that many candidates do not want to be part of that
Christina Hansson, Hansson Management
When that uncertainty arises, it is rarely because of one remark in a meeting room. It is about the overall impression the candidate gets of the company. How are new people received? Do employees seem relaxed? Is responsibility discussed openly, or is there a constant sense that final approval will still have to pass through the owner? These things can be difficult to put into a job advert, but they matter when a strong candidate assesses whether to say yes.
One of the clearest warning signs is when the owner’s involvement becomes too close. Many business owners have naturally followed the company in detail, because they built it themselves or helped carry it forward. But when a new leader is brought in, that habit can become a barrier. A person hired to take responsibility will also be watching to see whether responsibility is actually being handed over.
- Micromanagement can be a red flag. We see that many candidates do not want to be part of that, says Christina Hansson.
Values and culture
In a family business, the culture set at the top can quickly spread through the rest of the organisation. That can be positive if the owner is clear, fair and open to new ideas. But it can also make it difficult to separate the business from the person who owns or runs it. If moods shift, if temperament takes up too much space, or if employees seem hesitant, it can signal that everyday life in the company is more complicated than the role appears on paper.
In recruitment, it is therefore crucial that the company can show consistency between what it says externally and the reality a new managing director will enter. Many owner-managed and family-owned businesses have strong values, but those values have to be felt in the meeting with the workplace. If the company presents itself as a place with freedom, trust and short decision-making lines, that must also be visible in the way the recruitment process unfolds.
Family ownership can also raise a different kind of concern from a job in a listed group or a private equity-owned business. For some leadership candidates, it is a strength because it signals long-term thinking, culture and closeness. For others, it can raise doubts about whether decisions are really made at the executive table, around the family dining table or somewhere in between.
Sometimes we encounter candidates who say no thank you because it is a family-owned company. They do not dare.
Isabell Hansson, Hansson Management
Isabell Hansson finds that this concern can be enough for candidates to rule out a company early in the process.
- Sometimes we meet candidates who say no thank you because it is a family-owned business. They do not dare. They have tried it before and are nervous about that setup, says Isabell Hansson.
Clarity from the outset
That scepticism can be difficult for an owner to meet, because it is often based on experiences from other companies. A candidate may previously have joined a family-owned business where promises of freedom proved more limited than expected, or where old relationships, historical considerations and informal decision-making routes carried more weight than the organisational chart. That is why it is not enough to say that there is room to lead. The company has to show it.
That places demands on the owner before the appointment is even made. If a new managing director is to succeed, there must be clarity about which decisions are being handed over, where the boundaries lie, and which areas will remain close to the ownership. A strong candidate will often be able to accept that there are areas where the family or the owner has particular considerations. But it becomes a problem if those considerations only become clear after the appointment has been made.
At the same time, the company should be aware that resistance to a candidate is not always about the candidate. In an organisation where many people have worked together for a long time and relationships are close, a strong new profile can also create internal uncertainty. If a prospective managing director appears skilled, experienced and decisive, that can challenge people who already have a position in the company.
Christina Hansson mentions a recruitment process in which a candidate was initially rejected. According to her, it later became clear that the assessment had been shaped more by personal associations and first impressions than by the candidate’s professional qualifications. Once the company became aware of this, it was able to focus on the candidate’s skills and what the person was meant to contribute. The candidate was hired, and according to Christina Hansson both the company and the candidate were later pleased with the decision.
Isabell Hansson sums up the point briefly.
- You should not be afraid to hire someone who is better than you are, she says.
This does not mean that family-owned businesses are poorly placed in the competition for leaders. On the contrary, they can offer much of what strong candidates are looking for: short decision-making lines, clear values, closeness to the owner and the opportunity to make a visible difference. Many also have a more personal culture, with closer relationships and often more patience with people than in companies where everything is measured strictly against quarterly key figures.
Freedom to act
That human element can be an advantage when these companies need to attract leaders who want to be closer to decisions and see a more direct effect of their work. A managing director can often get closer to the owner, the employees and the market than in a large corporate group. The distance from idea to action can be shorter, and a skilled leader may have the opportunity to leave a clear mark on the business.
But that advantage depends on the company being able to explain itself properly and be honest about how it works. If an owner-managed or family-owned business wants to bring in a managing director from outside, it is not enough to talk about growth plans, products and the market. It also has to show what day-to-day leadership looks like. Who makes which decisions? How involved will the owner be? Which historical considerations matter, and what can a new managing director realistically change?
For the best candidates, freedom to act is often just as important as the title. A company may have a strong story, a good product and an attractive market, but if the candidate does not believe in the freedom attached to the role, the whole process can fall apart. This is where the owner-manager has to dare to ask the difficult question before the candidate does: Is the company ready for a new managing director, or is it really looking for someone who will continue to do things the owner’s way?
The latter can be tempting, especially in companies where history has shown that the owner’s judgement has taken the business far. But an external managing director only becomes truly valuable when that person is given the opportunity to bring something other than confirmation. Fresh eyes can see the habits that have become invisible to those who have been in the company for many years. They can challenge products, organisation, marketing, management layers and workflows without having the same emotional attachment to the way things have always been done.
- A new managing director can do a great deal. If you have been in the same place for a long time, it can be difficult to see the challenges and opportunities, because you are used to doing things in a certain way, says Isabell Hansson.
That is why the first conversations matter so much. A managing director from outside can bring experience, energy and fresh eyes to the company, but there has to be room to use them.
