Multigenerational family enterprises are vulnerable to a significant risk factor: human capital. Yet most private boards concern themselves with the organization of the business and overlook the development of the people within. This oversight can threaten the long-term stability and value creation of the business.
All businesses face what is called “people risk”—talent shortages, toxic cultures, gaps in critical thinking. But multigenerational family enterprises face even greater challenges, which private boards must address.
One of those problems is the “family premium” problem. Non-family managers will typically leave the business if they believe higher positions are reserved for family members only.
This loss of talent is one of the most damaging things to happen to a family business—and the least-discussed. It’s also only one of five challenges that private boards need to address.
Read about the other four risks in this article.
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