Due diligence in family office recruitment
Giles Graves has 20 years’ experience working for some of the most prominent family offices in the world, both historic multi-generational families with 1,000 years of history and hugely successful first-generation entrepreneurs.
In the latest in a series of articles for CampdenFB, he addresses recruitment within family offices...
Tax specialists, maids, lawyers, housekeepers, estate managers, gardeners, CEOs, nannies, investment bankers, butlers, gamekeepers, trustees, accountants, grooms, pilots, yacht captains and forestry workers... The variety of employees hired by a family office is incredible.
The best family offices have a low turnover of good employees. This is very rare.
There are historic family offices where several staff have stayed for 10-20 years with certain staff achieving 30-40 years of service. This is indicative of both good and bad practice. The employees are mostly happy and well looked after, they do a good job and relationships grow over time with mutual understanding. However, this scenario can breed laziness and these teams can lack new ideas, improvement and growth. In such places, introspective empires are built by senior employees, and politics are rife.
Equally, in several early-generation family offices, employees are hired and fired on a weekly basis. There are principals who go through three personal assistants per year. The team is always evolving and there is energy, growth and inspiration. On the negative side, there is a great waste of time and effort in hiring, training and then firing the wrong people, little team confidence or morale, short-term thinking and great potential for expensive mistakes and confidentiality breaches.
In both extremes, something remains constant. People tend to hire people who are the same as them. The culture of the place is therefore built on the character of the ones doing the hiring. In some cases, the family members themselves will have a lot of influence. In other cases, it is left to the employees to hire. In the latter scenario, the office culture can separate from the family’s until the family feel like unwelcome guests when they arrive in the office for their annual meeting.
It is important for families to keep control of the culture of the family office if wealth is to survive multiple generations. The family must have fundamental principles and these must be communicated consistently throughout the family businesses. The family presence and promotion is essential.
Families can easily lose control of the culture if the wrong people are chosen to lead.
The family office sector attracts the best and the worst of people. On the one hand, some of the brightest minds in the professional fields are working for and with family offices. Specialists and enthusiasts, who are passionate about their work. This is at every level of service.
The difference that good administration and professional services can make in a family office, from great legal, tax and investment advice to day-to-day planning and project management. The positive difference that can be made to the family’s lives and their assets is considerable.
The joy that a knowledgeable gamekeeper can bring to a family who is interested in nature and the countryside. The care and love and teaching and companionship a good nanny can give to a child. The way a good housekeeper or butler can keep a household together, making sure everyone leaves the house each day with everything they need and when they return dinner is waiting.
We should recognise all roles, all service to the family as important. It’s no good having a clever professional working away in the office if the family are miserable receiving poor day-to-day service in their home.
One bad hiring can ruin the entire team. In fact, one bad hiring can ruin the family.
The sector can attract arrogant people, sycophants, dishonest people, at every level. There are plenty of examples out there of family employees who have breached confidentiality, played political games and made life miserable for everyone around them.
It is possible make mistakes at opposite ends of the same scale. Some are reluctant to hire anyone that is better than them. This signifies low confidence and short-term thinking. The result is overall lower standards, higher turnover and low morale… but the leading employee keeps their job and builds an empire.
Another mistake is to hire blindly, thinking that just because someone has been to a certain school or university and achieved academic results or proven that they can play the system in a corporate role, or that they were hired at one point by, for example, ‘McKinsey’, that they are therefore good for the business or good for the family. That is not the case.
Conducting due diligence is the key to success. There are considerable benefits to taking the time to research in detail who is being employed.
From the start, it is important that the family get to know the employees who are building the family office teams. Getting the right leadership in place is a key step to starting to get to your family office team right.
How many employers out there know their lead employees well? Not just through meetings and while at corporate events (everyone puts on the best behaviour then!) but personally got to know them, their best accolades and their worst faults. Have they met the 4am version of this person? How does this person act when they don’t have all the facts, are fighting against the odds or tired and grumpy?
Too often employees are given incredible amounts of confidential information and power, and yet the family employing them know little to nothing about them. Due diligence in recruiting is essential, and rare.
