Six steps to maximising a successful family office CEO/CIO hire
Family offices can provide a very exciting and rewarding career with unique challenges for a confident leader. However, there is fierce competition for talent and many family offices struggle to attract and retain the best candidates.
There are several reasons for this. Family offices are shrouded in mystery so it can be hard for a prospective candidate to do their homework on the organisation and the family. They are often idiosyncratic organisations that are hard to describe and tricky to adapt to. Job descriptions are often opaque and subject to change and compensation levels vary enormously. The biggest challenge often comes down to identifying, attracting, and landing a top hire who fits culturally.
If you are looking for a CEO or a CIO, or even a hybrid of the two, set out below is our guide to help you maximise your chances of making a good hire.
Step 1. Be clear about your family vision, values, and strategy
Top candidates want to know that they are joining an organisation with good governance, a clear strategy, and a strong purpose. They will be interested in who the Principal is and what has made them successful, but more importantly what they want to achieve in the future. Therefore, clarity on what the family stands for, wants to achieve and over what time frame, will stand the family in good stead for attracting the right candidate.
Some of the best candidates will have worked for big organisations with very different hierarchies and communication structures. They will be looking for a family office structure that is aligned with the family’s vision, with clear roles and scope of responsibilities. A well-defined decision-making framework and articulated values is a strong selling point. Clarity around who are the clients; family members, trustees, other third-party investors, and what services they require is also really helpful.
Step 2. Define the role, responsibilities, skills, and cultural fit
Your strategy should determine the shape of the role and mandate you give them. It is essential that time is spent getting this right - defining the job, responsibilities, performance measurement and expectations as well as the skills and personal characteristics required for success. It is likely their role will be very varied - one day buying a vineyard, the next day foreign exchange trades – and you won’t be able to find someone who is an expert in everything. You will definitely want someone with initiative who can confidently pivot to meet your needs.
Too often families will be comfortable with someone they like and trust, compromising on the right skill set. For example, they might hire a relationship banker they have worked with for years when they actually need an investment specialist. Watch out for the rock star CIO or investment banker. Often the latter wants to completely change the investment approach and finds it hard to accommodate the family’s investment preferences. You want them to deliver your strategy so be really clear what this means. Do you want ultimately to create an investment engine to attract other families to invest alongside you, or do you want to target wealth preservation or maybe take more risk and go for greater wealth creation or a combination of both?
In our experience, the key determinant of a successful hire is balancing technical ability with cultural fit. This means, sharing your vision and values, the ambition you need to achieve your goals and approach that will successfully integrate with your family and existing set up.
Step 3. Work with an executive search organisation
The biggest mistake a family can make is to rely on their network to find a candidate, as this limits the field and relies too much on the references of another family office. Most family offices are looking to hire someone who will be with them for at least ten years if not twenty, so it is worth the time, effort, and cost of engaging a specialist search firm to get this right. They will know the landscape, help define the candidate profile, and position the family office well and accurately.
The right head-hunter also understands the nuances of family offices and candidate expectations so can balance these and ensure the opportunity is sensitively presented. They are used to working with the privacy requirements of family offices, including how to set out the key challenges they will be asked to take on. This could include the family’s strategy regarding family members working in the office and to whom they are accountable.
Defining what success looks like, the resources and training available as well as the ’must have’ versus ‘the nice to have’ are key success factors. Spend time with the search firm giving examples of who has been successful and thrived in your family office and why. They can also do in-depth research early on in the process, to build a thorough understanding of the candidates. This should include the environments they thrive in or don’t, how effective they are as leaders and nurturing talent themselves as well as how well they communicate.
Step 4. Get your compensation and performance metrics sorted
Alignment of expectations is one of the most important factors to address early on in the process. This will prevent you wasting time on people whom you cannot afford or whose time horizon for performance pay is not long enough. You should decide whether you think of the head of your family office as an employee on a salary and discretionary bonus or a partner with skin in the game be it co-investment opportunities, an LTIP and/or sweet equity.
Defining the short and long-term performance expectations and the quantitative and qualitative metrics of success are critical to attracting top players. We recently worked with a family office to introduce formal processes for compensation discussions and performance reviews so they could attract a new CIO. In our experience, knowing who will contribute to the assessment and who will deliver the performance review matters to candidates and will influence their view of the organisation.
Step 5. Prepare well for the interviews
The war on talent is real and whilst each family is unique, often with an interesting and glamourous heritage, this is not always enough. Many principals forget that when they are interviewing, they are also selling themselves and the opportunity. They may be understandably cautious about letting candidates know the extent of their wealth, however a CIO candidate will want to understand up front how it is configured e.g., investable assets vs business assets.
Draw on industry expertise and trusted advisors to help you identify the right technical skills and emphasis you want to place on experience within what is likely to be a broad role. We have found that including a non-executive director and/or an investment committee member as part of the interview panel adds a lot of value. Having different lenses on the candidates not only provides excellent feedback, it is also great for the candidates who see the value you place on the hire. A good search firm will provide you with areas to clarify and probe in an interview, as well as a list of interesting and challenging questions to ask.
Step 6. Plan for Success
The last step required is a well thought plan for how you will introduce and integrate your team - designed to help them succeed and thrive. Most family offices do not have human resources departments as they are too small, but working with a third-party expert, particularly for training and development is worth every penny. The onboarding programme should be as much about helping the new executive understand the family office and its functions as it is about helping them build relationships with key stakeholders such as advisers, family members and staff.
Appointing a CEO is a significant investment (in time and money) so make sure they have the support and support- network to succeed from day one. Mentors and coaches can add substantial value in supporting both the Principal and the new hire. A mentor can act as a sounding board for the Principal and provide honest feedback which can be hard to find within the team while they build trust. We recommend a ‘first 100-day coach’ to help the CEO navigate and create early wins as well as build a culture of success.
Planning for success ensures that after all the hard work of getting the right person on board you do not lose them, so think carefully and strategically about retention. A good retention plan includes clear business goals, the resources and authority to achieve them, competitive compensation, good governance, great formal and informal communications as well as professional development opportunities.
Securing the right CEO or CIO can be transformational for your family office. We are happy to tell you more and if we can support you in any way please get in touch.
