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How should family firms deal with the tensions of appointing a non-family CEO?

An increasing number of family firms choose to select a non-family CEO for the highest executive office when there is no suitable family member available. A recent example of this is the Swedish retail giant H&M where the third generation family member Karl-Johan Persson recently handed over to the non-family CEO Helena Helmersson. However, appointing a non-family CEO in a family firm tends to give rise to tensions.

New research from the House of Innovation reveals insights about how these tensions can be managed for effective work relationships between the non-family CEO and the family owners. This can be done by acknowledging that this change creates four paradoxes related to professionalization, collaboration, resource allocation, and role transition. This research suggests that an advisory board can play a vital role in addressing the tensions between the new non-family CEO the family owners. They can do this by helping to manage the four paradoxes and integrate the competing choices and directions into new and creative solutions. In this way, the work of the advisory board provides new value. By adding new perspectives, the board members can synthesize the competing forces within the firm and support the owner family to reach solutions to difficult decisions. This can, in turn, make the tensions salient and possible to manage.

This research is important because the involvement of a nonfamily CEO is already commonplace in many family firms and will become even more important in the future. It contributes to paradox theory in management studies in suggesting that by addressing underlying tensions in organizations, decision-makers can more effectively manage them. This management will not only yield behavioral adjustments but also changes within the system of the family firm. In short, this means that tensions are not only managed by behavioral changes but also by structural changes of the systems.

Future research could focus on CEO succession without the help of an advisory board or with the help of other types of external advisors, such as consultants or non-executive directors of the board.

Researchers:
Judith van Helvert-Beugels
Windesheim University of Applied Sciences, The Netherlands

Mattias Nordqvist
Stockholm School of Economics, Sweden

Roberto Flören
Nyenrode Business Universiteit, The Netherlands

Click here to read the research article

Contact:
Stockholm School of Economics: House of Innovation
info.hoi@hhs.se
press.hoi@hhs.se

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