Family bosses ‘better than outsiders at inspiring enthusiasm’

The Times — 10 November 2022

Family chief executives are more likely than hired hands to infuse employees with positive emotions such as enthusiasm and excitement. The authors looked at 497 companies in Germany that had a mix of family and non-family members at the helm and examined responses from their 41,200 employees and 2,246 direct reports. They found that despite the companies’ “outdated hereditary leadership structures” the family bosses did a better job than professional chief executives at binding their teams emotionally around a common goal.

Prof. Dr. Jochen Menges, who co-authored the research, said: “There has long been a conundrum in family business research: why do many such firms thrive despite anachronistic management structures and low investment in employees? These firms, especially when they are relatively small and less formalized, provide a workplace characterized by high-energy positive emotions, not despite but rather because of their seemingly outdated hereditary leadership structures that reserve the CEO role for family members.”

He said family chief executives were more likely to be able to convey their genuine positive emotions about the business to colleagues and this then spread through the workforce. He added that although the study was conducted with German companies he expected the findings to be valid in other countries. “Family CEOs everywhere have the emotion-evoking double role as family members and business leaders,” he said. “The emotion contagion by which CEO’s emotions spread through their company is also not confined to a geographic region.”

He acknowledged, however, that there was potential for employees of international family companies in Germany, known as the Mittelstand, to display “potentially higher degree for deference” to their CEOs than their counterparts elsewhere.

Article by Richard Tyler