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Talent Management
in the Family Firm
Attracting and Retaining the Best
Fatima Hamulday
FAMILY
FORUM building ties, deepening knowledge, driving success
‘Talent Management in the Family Firm’ was commissioned by The Family Forum,
a pan-African initiative of Mary Oppenheimer Daughters family office (MODO).
A brief description of The Family Forum follows at the end of this publication.
Talent Management
in the Family Firm
Attracting and Retaining the Best
Contents
Key points���������������������������������������������������������������������������������������������������������������������������������������4
Engaging Talent Management�������������������������������������������������������������������������������������������������������6
Proposition One: Mindset Matters�����������������������������������������������������������������������������������������������8
Proposition Two: Organisational Purpose �����������������������������������������������������������������������������������9
Proposition Three: Understand People ���������������������������������������������������������������������������������������9
1. Assumptions��������������������������������������������������������������������������������������������������������������������������������������9
2. Needs����������������������������������������������������������������������������������������������������������������������������������������������10
3. Psychological Safety������������������������������������������������������������������������������������������������������������������������10
Proposition Four: Process Counts�����������������������������������������������������������������������������������������������11
Talent Management in the Trenches – Two Cases to Learn From���������������������������������������������12
What Makes The Good Ones Come On Board – And Stay:
The Non‑Family Member Executive’s Perspective ��������������������������������������������������������������������������12
‘We’re in business to employ people’ – CEO of a Third Generation African Family Firm������������13
When All is Said and Done – Nature and Nurture ��������������������������������������������������������������������������15
Endnotes���������������������������������������������������������������������������������������������������������������������������������������16
Key points
Leaders need The Afri-
Family firms have innate potential
to find the can context
to excel in talent management
best talent poses greater,
but not
insurmount-
Situational reality is a key driver in able, talent
What attracts talent management challenges
and keeps
quality
people? Both nature and nurture play a role in quality talent
management
Talent Management
in the Family Firm
Attracting and Retaining the Best
The world has never looked and felt more different or more emergent than it does right now.
A global pandemic and issues around racism have overtaken the concerns of the 4th Industrial
Revolution and changing political landscapes. Talk of a millennial lens has shifted to talk of a
Gen Z lens. The implications of a gig economy are only just being grasped.
When all is said and done, understanding that all enterprises are human enterprises has
never been more needed. The stark reality is this: enterprises are built by people or destroyed
by them. Having the right people on board, and holding onto them, is more than just a
need‑to‑have; rather, talent management is an organisational imperative for those who seek to
grow and thrive. Family firms, as vestiges of the most primordial
form of human organisation, taken to new heights, know this
better than most. Perceptions: Family Firm vs Non-
Family Firm
The practice of talent management is a relatively new addition to
the arena of people management. It entered the organisational Management Team
eco‑sphere after a study by McKinsey1 and their ‘call to arms’ for Equal
Skills
harnessing talent. Simplistically, talent management encompasses
the strategic intent of a firm to, firstly, understand what type of Capacity to Attract Good
Worse
talents the organisation needs, and secondly, to recognise the gaps Managers
in talent in the organisation, and then, to excel in recruiting well
against this backdrop. In addition, and equally critical, to excel in Salary and Fringe
Worse
developing and holding onto talented people in the organisation, Benefits
including creating a culture conducive to long‑term personal and
organisational excellence. For the family firm, as enterprises which Access to information Worse
deal with added layers of complexity in managing human relations,
sound talent management and all that accompanies it, has an Stock options Worse
elevated organisational imperative.
Freedom over decisions Worse
Some research suggests that family firms are better at holding onto
talent, citing lower turnover rates (in one study, a 9% turnover rate Selection and training of
Worse
at family firms compared with 11% at non‑family firms); others successors
extoll the family firm as great investors in people, hallmarks of
inclusive work culture, with cadres of committed people. Yet, other Quality of Board of
Equal
studies refute these trends, citing lower pay rates, less investment Directors
in people and a slightly higher turnover rate.2 A perception study
Representation of
amongst MBAs – one talent pool for family firms – revealed that Better
students hold a slightly negative image of family firms in a range
Owners Interest
of talent management issues shown alongside, but particularly
Job Rotation Lower
with respect to, how well conflict and issues of nepotism are
managed.3 Broad brush-stroke studies, however, mask situational Age of retirement Higher
reality. What matters, when it comes to talent management, is
what is happening in your firm, right now. What is clear is that Nepotism Worse
when family firms hone in on what makes them unique – strong
ethics and values, inclusivity and care, a focus on the long term – there is potential to excel and
outperform non‑family firms. Simultaneously, when the difficulties associated with family firms
– nepotism, dysfunctional rivalry, irrational decision making, an inability to transition across
generations, to name a few – then survival, rather than excelling or outperforming, becomes
the order of the day.
The complexities of managing talent for the African family firm can be more intense. Consider
that doing business in Africa may mean contending with a shallower local talent pool in the
face of underdeveloped education systems. Layered upon that, competition with international
opportunities that the best of this already constrained talent pool
can readily access. All this is exacerbated by the socio‑political
What matters, when challenges that accompany a continent struggling to find its identity in
a post‑colonial world.
These conditions need not mean the end of excellence; rather, it may well be the breeding
ground for excellence. Anecdotal and academic evidence is clear that excellence is
developed in adversity, not ease.6 An African family firm that is prepared to meet the unique
talent challenges of family business in Africa could readily become the exemplar in talent
management. And from exemplary talent management comes exemplary business practice.
Here is a question to consider – what is it that strong families do better than most?7
Strong families nurture the best in each other – with respect, care and affection, but also with
sound processes to manage crises. So why should family firms not do the same and extend
these traits to the entire business and those partnering in it?
On the topic of selection, one of the most interesting takes on talent management in recent
times has come from Claudio Fernández‑Aráoz.8 He proposes a new era in talent management
called ‘potential’, following many years of selection based on physical attributes, followed by
intelligence, experience and past performance, then more recently and still commonplace,
based on competencies and emotional intelligence. Potential, he says, is ‘the ability to adapt
to and grow into increasingly complex roles and environments’ and is necessary for current
environments which are simultaneously more volatile, more uncertain, more complex and
more ambiguous where past performance and competencies are not sufficient to determine
suitability for a role. Given how much more volatile, uncertain, complex and ambiguous doing
business in Africa is, his views and experiences bear considering. Whilst potential is harder
to discern than competencies, requiring a much deeper searching for stories and responses
during the selection process, there are five aspects he looks for: motivation, curiosity, insight,
ability to engage and determination. Simultaneously he advises, when wanting to hold onto
these potentials, in understanding the kind of motivation they have (see below), a company
needs to offer autonomy in four respects:
Potential
Motivation Curiosity Insight Engagement Determination
Ambitious, Seekers of new Able to gather Able to use Internal
wanting to experiences, and make sense emotion resources to
leave a mark, knowledge, of information and logic to fight for difficult
simulaneoulsy valuing candid that suggests communicate a goals despite
invested in feedback, an new possibilities persuasive vision challenges and
large, collective openness to and connect with bounce back
goals; humble, learning people from adversity
always seeking
to improve
themselves
In addition to autonomy, high potentials crave mastery and purpose – they want to excel
and they want to make meaningful contributions beyond themselves. As such, they are to
be developed in diverse and challenging assignments. Whilst this may seem an ideal for
executives, he does not believe it to be limited to this: ‘I now consider potential to be the most
important predictor of success at all levels, from junior management to the C‑suite and the
board’.
How does such a perspective help the African family firm? To engage
Purpose talent management in a more family‑appropriate and nurturing way,
Values there are four key propositions that family firms should consider
Ethics – the mindset to be adopted, organisational purpose, the
whole person perspective and the role of process (left):
Proposition One:
Process Communication
Person
Assumptions
Mindset Matters
Fair Let us consider why talent management has
Reflection Whole view
Transparent taken off. For starters, for those companies
Consistent Learning Psychological
security seeking to extract greater value from human
resources, there is good financial sense in
it. Disengaged employees are less productive,
and a toxic work environment can tie up valuable
resources in disciplinary matters whilst high turnover costs
Mindset not only in new recruitment cost, but in lost productivity
Value through
until replacement materialises, not even accounting for loss of
humanisation
institutional knowledge or possible loss in morale if the employee
was critical to a positive institutional culture. Studies peg the cost of
employee turnover at 1.5–2 times the annual salary of the employee,
which can rapidly escalate to massively significant figures – like 213 times the
salary for highly skilled personnel.9 Effective talent management simply makes good business
sense, and this is certainly one mindset to adopt. But talent management can also be about
a more deep‑seated rethink about human engagement in places of work, especially if one
steps into a nurture and potential mindset. Unfortunately, for too many people, workplaces
are often spaces of regretful dehumanisation. A recent ‘African Employer of Choice’ survey10
found that almost half of survey respondents did not feel they could trust their leadership, and
a quarter felt that leadership did not have their sincere interest and wellbeing at heart and that
they were not listened to. These elements – trust, being cared for and being heard, and being
respected, are core components of being fully human. And if an employee is not being engaged
in a full manner, what incentive is there to be completely engaged in the work they do?
Consider even the language used to refer to people in organisations – human ‘resources’,
human ‘capital’. Why not ‘people’? Or ‘partners’? Or ‘family’? If words create worlds, how is a
world of resources and assets conducive to a full human experience, especially on a continent
steeped in a social biology of collectivism?
Here is the first proposition – what if people were valued as innate beings of creativity and
potential, as collaborators and contributors, as partners, far more impactful than anything
else in the organisation? If firms are to engage employees fully – the hallmark of great talent
management – they have to engage them as people first. Not as resources, or as capital or as
an asset. And this reorientation starts with language, and with mindset. A mindset that engages
people as fully fledged human beings, with a range of needs, with the acknowledgement
of both the best that they can bring and an equally pragmatic acceptance that people are
imperfect, even when well intentioned. When talent management is repositioned as a process
of humanisation, then its value is infused with longevity and more deep‑seated returns on
investment ensue.11
Talent management as humanisation, and the nurturing of it, rests on the remaining three
propositions – purpose, people and process.
1. Assumptions
Many years ago, a social psychologist, Douglas McGregor, shared his work on Theory X and
Theory Y. The basis of it is this – what are things you hold to be true about people and the
people who work for you? If you believe employees are somewhat lazy and dislike work, they
need to be constantly supervised or they will slack off, if they lack ambition and need external
motivation to do well, then this becomes self‑fulfilling. If, however, you believe people are
more intrinsically motivated, love to have responsibility and learn about how to do their work
better – in other words, they have potential – then this becomes self‑fulfilling. You are likely
to unconsciously recruit people that fit your assumptions, and you will unconsciously manage
people in a way that mirrors these assumptions. This is as true now as it was in the 1960s. And
here is the crux of it – would you like to be managed by someone who sees you, as you see
your employees? And if not, why not? What steps can be taken to address this?
2. Needs
What do people need? Traditionally, organisations have held very basic ideas of needs. These
range from Maslow’s physiological needs to needs of self‑actualisation,
to autonomy, mastery and purpose embedded in potential – but,
most often, it was believed that offering employees a good financial
package was all that was needed to achieve this range of needs.
Spiritual and However, whilst good remuneration certainly holds appeal, and is a
Purpose necessity, organisational culture and purpose also matter. But how
can we frame all this? For starters it is necessary to understand that
people evolve and circumstances change – as will their needs. What
they needed years ago when they were first recruited may not be
Health
what they need now. So two things become key: the frequency and
and Quality
Continuous Conversations
quality of the conversations you have with employees so you can learn
of Life
about what really matters to them in that moment; and understanding
that there are fundamental needs that most people need fulfilled,
in different degrees, at different times – financial needs, progeny
Intellectual
and family needs, health and quality of life needs, intellectual and
and
developmental needs, and spiritual and purpose based needs.12 In the
Developmental
Africa Employers of Choice Awards, quality of healthcare provision was
a key driver for employment choices, with women citing healthcare
and flexible work hours as key, and often, less than ideal with their
Progeny and employers. This illustrates that progeny and family needs, along with
health and quality of life needs, are real and not to be neglected.
Family
Similarly, this same survey emphasised, as mentioned, the ability to
make an impact (spiritual and purpose needs) and the opportunity
to learn new skills (intellectual needs) as key drivers. Thinking more
holistically about needs, and, having open and honest conversations so
Financial that you can reflect and learn about what your people need are critical
to talent management. And, importantly, if you can creatively cater to
these needs in a meaningful way, your talent management will be in a
good place.
3. Psychological Safety
‘Psychological safety’ is the basis of the honest conversations mentioned above. Amy
Edmondson, a Harvard Professor, coined the term, saying it is when ‘an employee believes
that they will not be punished or humiliated for speaking up with ideas, questions, concerns or
mistakes’ – work is a safe place to talk, without fear of retribution, emotional or otherwise.13
The absence of this kind of safety in a workplace rapidly depletes morale, motivation and
even the most talented employee will fade into mediocrity without this in place. Building
psychological safety in the workplace is a tough task if not already there, but it starts with the
leader and the leadership team, and to have any hope of succeeding at talent management,
this is a non‑negotiable.
But even this is not the end of what makes process count. Insights
responsibility to enable
from the field of operational excellence are clear – work processes
should be reviewed and designed to eliminate overburden or uneven
the processes to do so
distribution of work, as well as non‑value adding work. The unfairness
intuited by employees when they are overburdened undermines respect and motivation, and
excessive, unnecessary non‑value adding work not only frustrates customers, but employees
too. Often organisations unwittingly rely on good people and star talents to rescue bad process,
but when this becomes the norm, good people rapidly burnout and become jaded and may
seek a more well‑conditioned work environment. A key tenet in Operational Excellence is
that people have a right to do good work and managers have a responsibility to enable the
processes to do so. Yes. You can read that again: people have a right to do good work. And,
the role of good process is not only to have a sleek talent management process, but to create
a work environment that sets people up for efficiency and success, thereby echoing and
giving life to espoused values. When people’s right to good work is ensured, then they can be
rightfully asked to deliver on that responsibility, and then they can purposefully work to their
potential.
Clarence is quite clear: reputable family firms may have a head start in attracting talent, but
the playing fields are rapidly levelled. Exceptional people, he believes, are not in it only for
the money– ‘the most talented people are searching for meaningful work and an empowered
work culture’ he says – echoing principles of purpose, impact and potential, highlighted
earlier. Needless to say, a family firm in the midst of an identity crisis does not align well with
these workplace needs of talented people. To speak to these needs, he says the firm needs a
compelling vision and mission, and a clearly defined purpose that aligns with those of potential
hires. When the objectives of the firm and potential hires are mismatched, talented individuals
likely walk away; or, if they stay, it may not be for long, as those factors that made them come
on board will likely erode sooner rather than later. For Clarence, working with the family to
identify and articulate this vision and mission has been vital in ensuring that the right kind
of people are sought, and brought on board, and that the family firm has more to offer than
reputation alone.
Another area Clarence highlights as critical to the attraction and retention of talent is
consistent, rational and transparent decision making, along with incentives that are attractive
when exceptional performance is delivered. Clarence explains: ‘One of the things people
worry about when they consider working for a family enterprise is whether their decisions will
be their own or what the likelihood is that compelling ideas/investments will be irrationally
vetoed by a family member. When I talk with a potential new hire, I am sure to tell them what
my own experience with the family has been and it is this: Firstly, their word is their bond and
they genuinely try to come up with win‑win solutions for all parties involved. I explain to them,
with evidence, that I have very, very rarely had my recommendations overturned, and certainly
not for irrational or sporadic reasons. Secondly, I emphasise the ethics‑in‑action that I have
experienced – this family wants do the right thing always, even if it is viewed negatively, even
as it relates to taking an ethical stance counter to the geo‑politics of the day, without worrying
about public perception. Allaying these fears over ethical and rational decision‑making on the
part of the family is key both in on‑boarding and retaining good people.’
Clarence explains that in his experience, it is not enough to simply demand excellence from
people – they have to be handsomely and appropriately rewarded when such excellence is
delivered. This he believes is especially important in an environment where people may have
heightened concerns about how their growth may be capped and the limited prospects to
own equity in the firm. Whilst family offices may not typically be ahead of the curve in terms
of innovation, for those hires that value the ability to innovate, these kind of incentives might
prove key. In reflecting on his decision to stay on board with the family, he points out that he
had no reason to ever leave – there was always meaning beyond mere profit in the work he
was being asked to do; he was constantly being challenged in the roles and projects he was
assigned and loved the learning that he gained from this; and, the family trusted him – he
was given autonomy to manage his team as he saw fit with minimal interference and genuine
collaboration. As a non‑family executive member, his advice to family firms is pointed and
cogent – ‘Ensure you have a purpose-driven mission, so people are engaged in meaningful work
and lifelong learning; strive to have an empowered work culture, with consistent, rational and
transparent decision making, and reward your people when they deliver exceptional results. This
makes attracting the right people, and holding onto them, that much easier’.
– in the end they have families to feed and educate and we understand this all too well. The
current economic situation in our country is tough – when talent leaves, they often leave to
another country, not to another firm. But, we have this strange phenomenon, where people
leave, only to return. People tell me that what they get from working from us is something much
bigger than money. And often we take people back if there is still a good fit. After all, when
people join us, we say ‘Welcome to the family’, and ‘when you leave, you leave the company
but not the family’. In fact, we have mechanisms to ensure we stay engaged with key team
members who have had to exit – like celebrating children’s graduations.’
Beyond the mechanics of talent management, what the firm has succeeded in is ‘the great
place to work’ component of talent management – and they show, in practice, what Clarence
in the previous case argued for regarding organisational purpose. However, their road has not
been easy and this firm exemplifies the courage required to walk this
path. Especially challenging has been the necessity to deal with one
Understanding the of the big fears of non-family potentials: capped growth. Whilst not
precipitated by a fear of the loss of talent, but rather, the reality of
unique nature of local generational decay in a family firm and its ramifications, the family
embarked on a facilitated program to engage the family challenges
challenges, and family that arose from a desire to professionalise the business. This, Mathew
says, was a demanding but decisive point for the firm and the family.
is key to deciding the years, is that nothing we’ve done is particularly ingenious or unique
– it’s doing the basic things well, and caring. The premise for this,
nature of people you and where most people fail, whether in the family or in the company,
is that they don’t create the spaces to have the frank conversations
should be seeking out needed to move forward. I’d advise any family enterprise to create
the spaces and have these hard conversations early on in the family
and how to ensure you history, work through the underlying issues and have it as inclusive
and as broad as possible – include younger generations and spouses,
continuously appeal to take the opinion of non‑family members who have been with the group
at all levels, that have perspectives that are different to yours. Many
them times during this process, there were family members who wanted to
walk away. The advice and counsel of trusted non‑family members,
viewed as impartial, but loyal to the firm, was crucial in bringing
everybody back to the table to work through the more challenging aspects of the changes that
professionalization would bring’.
A key learning from this firm’s experience is the degree of clarity, confidence and conviction a
family can develop from having well‑structured, honest conversations about who they are and
how they want to grow. If any one of the those 3 components are not there – either clarity,
confidence or conviction – employees are likely to get mixed signals, which lead to distrust and
frustration, and ultimately the loss of talent.
As to the mechanics of talent management, the company has set up processes to allow them
to attract, develop and retain their best, whilst enabling sound succession planning. Mathew
explains: ‘We take our reputation, as an employer, very seriously and we want to be a name that
our employees can trust, rely on and be proud to be associated with. When hiring, we do not
necessarily look to find people who are a close fit to our full value set – if we limited ourselves
to this, it would be hard to find people all the time. So, we look for basic competencies that we
can develop, but importantly, we look for people with good hearts and with a sound underlying
nature. After an induction period, of about 6 to 9 months, if we ask questions about what is
unique about our way, we find we have good uptake when the recruitment has been sound from
a character perspective. From there on in, it takes on a form of wave after wave of training,
and calibrating the training and development to develop both the skillsets and value‑sets
or consciousness we want. We have simultaneously become more scientific in our talent
management and given a lot of thought to core competencies and behavioural competencies,
because if we can see what people are good at, and their behavioural aptitude, it’s easier to see
where people can excel. This makes job allocation and succession planning that much easier.
We also monitor very closely reasons for people leaving – currently largely because of the
economics of the situation, but we do the exit interviews to understand if systemic issues exist’.
Ultimately, Mathew advises that beyond making those critical spaces for conversations in the
family, and in the company, available, what is key is to ensure you treat people with the respect
afforded to family – ‘Keep people at the centre of all you do – don’t allow people to go the
fringes and make it purely about strategy, or numbers or machinery – don’t lose sight of the fact
that at the heart of it all, is the people. They make it all happen. Or not’.
When it comes to talent management in an African family firm, both nature and nurture play
a role. Understanding the unique nature of local challenges, and family business challenges,
is key to deciding the nature of people you should be seeking out and how to ensure you
continuously appeal to them. It is also key to understanding what you want the nature of
your firm to be. Once talented people come on‑board, the family values of nurturing kick in
– reaching out in care and empathy, expecting only the best from each other and sharing in
good fortune. Ensuring the right mindset; supporting it with spaces for conversation; a clear
purpose greater than profit; always seeking to understand the potential and needs of people;
and elegant, well‐crafted processes – these will liberate the innate enterprise of human
beings. In truth, a well run family firm has a head start on most others in the area of talent
management. It really is a question of the will and courage to deal with the unique challenges
of being a family business in Africa, and deeply wanting to excel in a collectively meaningful
organisational purpose.
MODO
Mary Oppenheimer Daughters family office (MODO) was established in 2016. MODO is responsible for
managing the commercial and philanthropic activities of Mary Slack (née Oppenheimer), daughter of the
late South African businessman and philanthropist Harry Oppenheimer and grand-daughter of Sir Ernest
Oppenheimer, and her four daughters. MODO’s interests and outlook are global but it has deep roots in Africa,
with four generations of investing experience on the continent.
FAMILY FORUM
The Family Forum was established in 2019. A pan-African initiative by Mary Oppenheimer Daughters,
the Family Forum draws on a long history of supporting and investing in family-owned businesses across
the continent. The mission of the Family Forum is to strengthen the contribution of entrepreneurial families to Africa’s
development and, through building ties and deepening knowledge of the challenges faced by family-owned
businesses, to help drive the success of forum members.