We’re Family Too: The Importance Of Relationships With Non-family Employees In Family Firms

Kiran Kandade, Nan Jiang and Joyce Ko from the Family Business Team at Brunel University share their thoughts on the importance of relationships within family firms with non-family employees.

In family businesses, effective leadership development and smooth succession planning are key challenges, especially in the intergenerational transfer of leadership. High-quality relationships around family business leaders, in particular successors, have a strong contribution to their leadership development. Research shows that strong relationships based on mutual respect, trust, and early affiliation with both family and non-family employees are instrumental in preparing successors to assume leadership roles successfully. These relationships provide guidance, foster commitment, and help successors navigate the complexities of family business dynamics.

For high quality relationships between non-family executives and family leaders to thrive, a high level of trust, respect, and reciprocal support between family and non-family executives is essential. Non-family employees can also be instrumental when multiple successors are vying for leadership, as their neutral position can help evaluate candidates more objectively and ensure merit-based decision-making, helping to mitigate sibling rivalry.

However, the role of non-family executives in this process has often been undervalued by both researchers and family business stakeholders. Despite their critical contributions to business operations and leadership development, non-family executives have frequently been excluded from succession planning or treated as outsiders. Yet, building high-quality relationships with non-family employees is essential for the leadership development of successors, offering an external perspective and helping successors gain credibility within the business.

A major challenge for family businesses in integrating non-family executives is establishing trust. Family firms are typically built on strong bonds among family members. It is less likely that the same level of confidence is shared with the external, non-family managers. This often comes from concerns about losing control over key assets—whether financial, operational, or strategic—and fears of weakening the family’s influence over business decisions. As a result, non-family executives may find it difficult to assert their role in this nepotistic culture, often leaving them feeling excluded.

This challenge becomes even more pronounced in the leadership transitions between predecessors and successors. Non-family executives are frequently consulted less during important decision-making processes, even when their experience and expertise might make them better equipped to guide or lead. When multiple family members are competing for the successor role, these tensions can escalate further. Tackling issues of trust and inclusion is essential not only for the wellbeing and engagement of non-family employees, but also for family businesses looking to professionalize their operations and ensure a smoother, more effective succession process.

In this article, we recommend actionable strategies for predecessors and successors to embrace the “we’re family too” perspective of non-family employees, to build a more inclusive and effective working environment, integrate them in the decision-making process, while maintaining the familial ethos that characterizes their enterprises, by building strong high-quality relationships with these valuable stakeholders of the business.

This article presents a framework, developed through research, that highlights the essential components for building high-quality relationships between family leaders and non-family employees. The framework, shown below, summarizes the key strategies for fostering trust, respect, and collaboration within family businesses at the different stages of succession processes.

In the case where multiple candidates are eligible for successor roles, all should be groomed equally and given fair opportunity and consideration.

Strategies for Predecessors

1. Early Affiliation of Successors with Non-family employees at the early Stage of Succession: Introducing successors to the family business at an early stage is critical for building solid relationships with non-family employees. Incumbents should encourage all potential successors to work closely with these employees from the ground up, reporting to them and gaining an appreciation for their expertise.

   By fostering this early affiliation, the predecessor sets a foundation of mutual respect and shared goals, which will strengthen the bond between successors and non-family employees in the long run.

   
   

   A third-generation family business successor of a machinery manufacturing company with 200 employees explained how his father who groomed him in his early years impacted his decision to join the family business:

   
   

   “From the time I was a kid my father brought me to the office… I grew up having a very good relationship with all the senior management in the company… I enjoyed walking around, talking to people, discussing at whatever level…as a trainee, not a supervisor…that inculcated in me a love for the business and it was a natural that after college instead of staying back in the US, or working somewhere else, I was as keen as I could be to come back into a company where I am familiar.”

   
   

   From the predecessor’s perspective, it is essential that they encourage and develop their offspring from their early childhood.

   
   

   A founder of a healthcare organization with 120 employees said:

   
   

   “I advise them [founders] that…from the beginning...put in all your efforts and…from the beginning develop the child so that one day he becomes a successor, whether it is a daughter or a son…it is not a day journey, it is a long journey, it takes time and it requires a very, high level of trust and level of love, affection, you have to be true with this generation, who is the successor.”

   
   

2. Support Mentoring Relationships at the Handover Stage: Predecessors should also create opportunities for senior non-family employees to mentor successors. This builds a sense of collaboration and mutual obligation that transcends the generational shift, as mentoring can help diffuse tensions and provide an impartial view of the successor’s leadership potential. Successors mentored by non-family employees often benefit from broader perspectives, learning business insights that may not be apparent through family-only interactions. Through mentoring, trust, and loyalty, relationships between non-family employees and successors can be solidified, which in turn aids a smoother leadership transition. A second-generation successor of a machinery manufacturing business says: “He [nonfamily employee] taught me everything how the company runs. And I have no problem to tell the world who has taught me …when I introduce him to anybody.” A senior nonfamily executive in a healthcare family business agreed: “The core members of previous generation’s leadership must be involved with the next generation leader.... The old pillars must be valued, and the successor must learn from them. This should come from both employees and bosses because...their long experience in the business must be adopted by the younger ones” Both provided invaluable advice to predecessors at the Handover stage.
   

3. Transfer Trust and Respect to Non-family Employees at the Completion Stage: Predecessors must actively transfer the trust and respect they have built with non-family employees to the next generation. This process begins by demonstrating trust in non-family employees in the presence of successors. The successor(/s) will model their behavior toward these employees based on how they observe the predecessor interacting with them. When non-family employees feel valued and trusted by both generations, they are more likely to reciprocate with loyalty, which becomes crucial for maintaining continuity. A senior nonfamily employee of a machinery manufacturing company advised that: “...the way they treat their employees is something that they [should] show to the younger generation, that this is how we treat our employees with respect and dignity. And that’s what we expect you also to do…Translating the values that they’ve had, the good treatment of employees that the previous generation had, the dignity that they give to people at the workplace… that’s what makes or breaks an organization, and the trust.”
   

Strategies for Successors

1. Earn Respect and Trust from Non-family Executives at the Early Stage of Succession: Respect is not automatic. Successors need to work diligently to earn the respect and trust of non-family employees. A proven way to achieve this is by starting at the bottom, learning the ropes, and reporting to senior non-family employees early in their careers. This approach demonstrates humility, willingness to learn, and a genuine appreciation for the experience and knowledge that non-family employees bring to the business. Successors who engage non-family employees on these terms will earn their respect, which is crucial for leadership success. This has been reiterated by successors of family firms: “Your biggest assets are your employees... you are running the business because of them…treat them like an asset. I have seen many second generation after studying from foreign colleges, change everything. But you should tell them, these 20 years has been grown on their hard work.” On a similar note, another successor of a family firm said: “These employees have certain experience, and you can’t just completely cut them off. Earn their respect, learn from them, and get them to buy into new ideas. Each business has a different culture, understand that culture.”
   

2. Emulate the Predecessor’s Relationship Approach at the Handover Stage: Successors who emulate the trust and respect their predecessor had toward non-family employees are more likely to maintain high-quality relationships. This imitation of positive behaviors—like showing genuine care for employees, being open to their input, and valuing their contributions—can transform formal, restricted exchange relationships into deeper, generalized exchanges characterized by mutual respect and long-term collaboration. Research shows that when this is not the case, loyalty and respect could be jeopardized. A nonfamily employee, talking about the successor of a manufacturing and trading family firm said: “I had a very good relationship with the predecessor… For any project he could rely on me, I would stay late when needed. When the son took over, everything changed... With the previous boss the relationship was deep with trust and respect on both sides. For this boss it is only as an employee, for me just a job! I finish at 6 and go home. I will not stay late for him.”
   

3. Take an Inclusive Approach to Leadership at the Completion Stage: As successors transition into leadership roles, they should adopt a collaborative approach that invites input from non-family employees. This requires successors to be proactive in building rapport, creating open communication channels, and ensuring that non-family employees feel included in the decision-making process. An inclusive leadership style fosters loyalty and trust, creating an environment where non-family employees feel valued and empowered to contribute to the business’s success. A successor of family firms that has had a successful intergenerational transfer of leadership said: “Whatever new things you want to bring into the company, take advice from your senior employees in addition to your father... They will be able to teach us little things, that have been a part of the company… but not written anywhere.”
   

Strategies for Non-family Executives

1. Be Open and Engaged in the Succession Process at the Early Stage of Succession: Non-family employees should be actively involved in the succession planning process. Their neutral position, coupled with their experience, can offer valuable perspectives on what has worked operationally and what requires improvement. By contributing to these critical discussions, non-family executives can help evaluate successors more objectively and contribute to a more robust succession process by building trust and respect with both the incumbent and the successor.

   Some advice for nonfamily executives from a successor of a family firm is: “Be aware that this is happening in the best interest of the organization. Please be patient with those changes…This is happening for the growth of you as well as the organization. And if you believe that this is not in the best interest of the organization then speak up and put forward that perspective…Because the organization should be and is bigger than any one individual.”
   

2. Mentorship and Knowledge Transfer at the Handover Stage: Non-family executives have a vital role to play in mentoring the next generation of family leaders. Mentoring becomes even more important, as it provides a fair, objective way to help all potential leaders grow. By offering guidance, sharing their expertise, and providing critical feedback, non-family executives help shape successors into competent leaders. This mentorship, if nurtured early in the successors’ tenure, builds a strong bond of trust and mutual obligation, which is indispensable for a smooth leadership transition. At the various stages of the succession, nonfamily members are indispensable to the young successors, as a senior nonfamily executive explained: “During the transition, I guided him. I explained each and everything to him, the advantages and disadvantages. Whether regarding finance, production, or customer satisfaction, I used to teach him, and he was humble and liked to learn from me.”
   

3. Help Build a Collaborative Culture at the Completion Stage: Non-family executives should actively foster an environment of collaboration and mutual respect with family members. This involves not only offering their technical and managerial expertise but also understanding the unique cultural dynamics of family businesses. By aligning their efforts with the values of the family while bringing in external insights, non-family executives can play a crucial role in enhancing the firm's leadership capacity and operational efficiency. A second-generation leader of a successful family business advised nonfamily employees thus: “Every person is different; a new successor is also different. Maybe they are used to…doing work in a different way. They [nonfamily employees] need to adapt to this successor… not necessarily blindly. Ultimately it should be for the good of the company, not with ego. Taking a consultative and collaborative approach and adapt to the new generation.”
   

Conclusion

High-quality relationships between family and non-family executives are fundamental to successful leadership development and succession in family businesses. Predecessors, successors, and non-family executives must all play their part in fostering trust, respect, and collaboration.

By focusing on early affiliation, mentorship, and inclusive leadership, family businesses can create a cohesive environment that supports both leadership transitions and long-term business success. While the insights we offer are rooted in cultural and contextual factors from years of research and experience with family businesses in East and South Asian cultures, they may be particularly relevant to businesses with predominantly collectivistic dynamics. This is especially true for ethnic minority businesses, which are often established with the support of family, friends, and community networks.

For these businesses, the emphasis on trust and close-knit relationships is central to their operations.

For family businesses in Anglo-Saxon cultures, where individualism tends to play a more prominent role, our insights can still provide valuable perspectives. However, these businesses may benefit from adapting strategies to suit a more individualistic framework, with a focus on open communication, clear governance structures, and merit-based leadership.

Balancing family interests with professionalisation can help ensure a smoother succession process and more sustainable growth, even in cultures where family loyalty might not be as deeply embedded in the business structure.