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Family Enterprises: Managing Underperforming Leaders
The Performance Challenge
How Can You Effectively Manage Underperforming Leaders in Family Enterprises?
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Failure is simply the opportunity to begin again, more intelligently.
- Henry Ford
One of the most sensitive challenges in family enterprises is addressing underperforming family members in management positions.
While family ties are precious, the needs of the business cannot be overlooked.
Failing to address performance gaps runs the risk of damaging your organization’s long-term success and credibility.
How to Maintain High Standards
So, what key actions can you take to address performance gaps and maintain high standards in your family enterprise?
1
Separate family dynamics from professional evaluation.
Implement governance structures that prioritize objectivity, such as independent board reviews, blind performance assessments, and third-party evaluations. The goal is to ensure that merit, not family connections, determines a leader's professional trajectory.
2
Establish clear, objective performance metrics.
Create comprehensive, measurable performance standards that apply equally to family and non-family employees. It’s important these metrics are quantifiable, specific to each leader’s role, and aligned to your organization's strategic goals.
3
Don’t shy away from addressing performance issues.
Create a detailed performance improvement plan with specific, achievable goals. Set clear timelines for improvement and establish clear consequences for continued underperformance.
4
Provide meaningful alternative opportunities.
Successful family enterprises recognize that not every family member fits a management role. Instead of forcing unsuitable placements, they proactively identify alternative opportunities that align with individual skills—inside or outside the organization.
5
Establish clear succession and exit protocols. Create transparent frameworks for career transitions, which will ensure that family enterprises manage leadership changes with professionalism and dignity.
How Can Family Enterprises Deal with Family Members Who May Not Meet Corporate Standards?
Sanjay Kapoor talks directly about what to do if a family member doesn’t have the drive to continue successful in a family enterprise.
The key is to balance familial respect with professional accountability.
By creating a transparent, objective approach to performance management, family enterprises can maintain high standards while preserving family relationships and professional management
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Meet the RRA Generation team
Lead by Justus O’Brien, our global family enterprise advisory practice brings decades of experience working with family enterprises globally, whatever stage of their journey. We recognize that family enterprises represent something extraordinary—where legacy meets innovation, family meets business, and shared values create powerful business advantages. Our commitment extends beyond traditional consulting—we build enduring relationships to become trusted partners in family enterprises for generations to come.
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