Lessons from Large Family Firms About Choosing a CEO

Family businesses are infamous for nepotism and infighting, especially when it’s time to appoint a new CEO. But when global talent adviser Claudio Fernández-Aráoz and colleagues set out to help family firms improve their leadership transitions, they were surprised to find that large family businesses had much better succession practices than their nonfamily counterparts, and they outperformed on several measures after new appointees took the reins. Four practices could help other types of businesses ensure successful CEO transitions: approach succession proactively rather than in reaction to short-term performance issues, bring on a few long-term directors and empower them to lead the process, don’t obsess about formal procedures but double down on rigor, and empower new leaders from day one.