Episode 26 · 15 February 2023 · 1:19:26

Why Personality Matters in Family Businesses: Lessons from Dinner-table Dreams to Boardroom Deals

0:000:00

Tip: click any timestamp below to jump there and keep playing.

Chapters & timestamps

Click any timestamp to jump the player to that moment.

The Great Regret and Apple's first Chief People Officer
panel interview#apple #chief-people-officer #great-regret
Why personality matters in business
panel interview#personality #business #psychometrics
Self-awareness and the bottom line
panel interview#self-awareness #bottom-line #workplace
Why Hogan is the gold standard for psychometrics
panel interview#hogan #psychometrics #gold-standard
How Al and Leanne chose their personality tool
panel interview#personality-tool #business-startup #hogan
The history of family businesses (surprisingly recent)
panel interview#family-business #history #succession
The unique dynamics of family vs. non-family businesses
panel interview#family-business #dynamics #conflict
The coffee rule: separating business from family
panel interview#family-business #boundaries #succession-planning
Why family businesses get more loyalty — and more conflict
panel interview#family-business #loyalty #conflict
What got you here won't get you there
panel interview#leadership #change #success
How to tell a child they're not getting the business
panel interview#family-business #succession #communication
Stephen's story: the grey Friday that changed everything
panel interview#family-business #personal-story #resilience
Top 3 takeaways
panel interview#takeaways #family-business #lessons
Outro
outro#podcast #outro #summary

Show notes

Why Personality Matters in Family Businesses: Lessons from Dinner-table Dreams to Boardroom Deals

Family businesses are the backbone of the global economy — but they're also a pressure cooker of personality, legacy, and emotion that most corporate structures never have to deal with.

This week, Al and Leanne are joined by two guests who approach family business from completely different angles: Ryne Sherman, Chief Science Officer at Hogan Assessments, one of the world's leading personality science organisations; and Stephen Shortt, a succession planner who grew up in two family businesses, bought both of them, and now helps other families navigate the treacherous waters of passing the torch.

Together, they unpack why personality matters more in family businesses than anywhere else, how to assess whether the next generation is actually the right fit (spoiler: they might not be), and the five-step process Stephen uses to help families plan successful successions.

Top 3 Takeaways

Personality predicts performance — especially in family businesses. The dynamics of family mean you can't just "manage out" underperformers the way you can in a corporate setting. Understanding who you're working with (and against) is critical.
Separate the business from the family — literally. Stephen's rule: if you want to talk about business, go for coffee. If you want to talk about family, stay at the dinner table. Blurring the two is where most family businesses fray.
Succession isn't about the next generation — it's about purpose. The first question isn't "who gets the business?" It's "what is the business for?" Once you know that, you can figure out who's best placed to deliver it — and that might not be a family member.

Connect With Us

Get in touch, book a call, or find Al and Leanne on LinkedIn — all in one place: truthliesandwork.com/connect

Mental health support: findahelpline.com — UK: Samaritans 116 123 · Mind 0300 123 3393 — US: 988 — Australia: Lifeline 13 11 14

Truth, Lies & Work is part of the HubSpot Podcast Network.

Full transcript

Expand full transcript

Al ElliottThe dirty little secret is that most businesses think they know their customers. They have the data, the records, the history, but it's scattered across 3 teams and 4 systems. And in our case, it's about 216,000 spreadsheets, which means nobody can actually use it.

Leanne ElliottWhat you should be doing is using HubSpot, because why? HubSpot connects it all— every interaction, every support ticket, every conversation— into one platform every team can work from. So when sales talks to a customer, marketing already knows the full story. And when you know more, you grow more.

Ryne ShermanNice.

Al ElliottCheck out hopspot.com, the agentic customer platform for growing businesses.

Ryne ShermanWhich was this, you know, top 5 company globally and was just completely ruined, mostly by his personality, right?

Al ElliottHello and welcome to the Truth, Lies, and Workplace Culture podcast, where we simplify the science of people. My name is Al, and I'm a business owner.

Leanne ElliottMy name is Leanne. I'm a business psychologist.

Al ElliottAnd welcome back. We like to think that we put the fun in the fundamentals of people.

Leanne ElliottDid you like that? Well, the sigh in the science of people.

Ryne ShermanOh, you like that?

Leanne ElliottThat was just off the cuff.

Al ElliottI know.

Leanne ElliottI'm on fire today.

Al ElliottYou are. You are. So today we're talking about the business of family, from dinner table dreams to boardroom deals. Great title, by the way.

Leanne ElliottGreat title.

Al ElliottAnd so we've got 2 fantastic guests joining us. Leah, who's the first one?

Leanne ElliottSo our first guest today is Ryan Sherman. Ryan is Chief Science Officer at Hogan Assessment Systems. Now you'll remember Hogan, we've talked about Hogan before. Dr. Sherman, I should say, is an expert on personality assessment, leadership, and organisational effectiveness. He is also co-host of the Science of Personality podcast, which exposes listeners to the latest research on these topics. His research on personality and its interaction with everyday situations was also awarded federal support from the National Science Foundation.

Al ElliottFancy.

Leanne ElliottI know. If that wasn't enough, he's also received numerous awards for his research, including being named Rising Star in 2016 by the Association for Psychological Science and the Sage Young Scholars Award in 2018.

Al ElliottWhen are you gonna win an award?

Leanne ElliottNot anytime soon.

Al ElliottShould we go and meet Ryan?

Ryne ShermanSo I am Hogan's Chief Science Officer, which means I run our data science division at Hogan. The data science division really consists of maybe 3 different parts. One part where we do custom research for clients, helping clients find personality-based solutions that fit their specific needs.

Al ElliottAnd our second guest is Stephen Shore. So Stephen is a strategy facilitator. He's a team development coach, leadership coach, and more importantly for this podcast, a personality profiler. Now, he spent his entire life and probably most of his childhood, actually, in family businesses, and he started a few of his own. He's bought family businesses from— that's easy for me to say. He's bought family businesses from his parents. He's grown them internationally. He's sold them. Um, he's learned a lot about successful succession planning and also made a few mistakes along the way. So he facilitates workshops, delivers keynotes, and teaches on leadership academies in Europe, North America, the Middle East, Asia. I don't think there's a continent that Stephen isn't a king on. Now, what's interesting is Stephen's parents still work with him or for him. I don't really know how it all works. Should we go and meet Stephen?

Stephen ShorttI'm Stephen Short. I'm from Dublin in Ireland. I've grown up in 2 family businesses. I bought both of them, sold one of them, which was reliant 100% on international travel. So sold that just before COVID so December 2019. So as my wife says, we'll never play the lottery because that was the day we won it. I have a personal interest in family businesses and the different nuances and the different problems and baggage that can go along with that and helping other people through it because I very nearly walked away from the whole thing until I found the different tools and mindsets and things that I needed to do to actually have a successful succession. And now I couldn't be happier with what I'm doing and still working and actually living with my folks.

Leanne Elliott2 fantastic experts with us today to unpick everything about family businesses and how to navigate them right through to running them successfully and selling them successfully. But before we get onto that, Al, we did our first news roundup last week.

Al ElliottSegment.

Leanne ElliottDidn't get any complaints. So I think, can we do it again?

Al ElliottI got one bit of feedback saying that they laughed because the music was so inappropriate. So I'm working on that because I was like, oh yeah, that seems all right. But, uh, So there might be some more music this week, and hopefully it's a bit more appropriate. We would welcome your letters.

Leanne ElliottWe would. We'll carry your pigeons.

Al ElliottOkay. So what are these trends that we're talking about this week? What have you spotted, Leanne?

Leanne ElliottWe've got a new word. We need, like, some kind of klaxon, like, new word alert, new word alert.

Al ElliottYou've just told editing Al that he's gonna have to go and find a klaxon.

Leanne ElliottSo we have a new word, the great regret. Any guesses?

Al ElliottIs it when you are in year 10 of your marriage and it's Valentine's Day like it is now? No, I'm only joking. I'm only joking.

Leanne ElliottI think your biggest regret on that one is you didn't get me anything.

Al ElliottThat is a huge regret. I won't, I won't lie.

Ryne ShermanNo.

Al ElliottSo what's the biggest, what's the, what's the great regret?

Leanne ElliottSo the great regret. So we had the Great Resignation of 2021. Mm-hmm. Which saw lots of people decide to, to leave their jobs. What's now being dubbed the Great Regret is that these people apparently regret making that decision. In fact, there was a survey carried out by some HR experts at Paychex, and they found that 80% of people who quit their roles in search of greener pastures regretted the move.

Al ElliottThat kind of makes sense that There was the great resignation. Everyone was doing it. You know, it's like shell suits in the '80s. Everyone was doing it. I wonder if Australians and Canadians and Americans will know what a shell suit is.

Leanne ElliottI don't know.

Al ElliottVery, very— maybe I'm gonna offend people saying very Liverpool and Manchester-centric, but it seemed like the north owned the shell suit.

Leanne ElliottIt was a northern style.

Al ElliottBut basically, yeah, a lot of people were doing it. Everyone was doing it. So I thought, yeah, why not? Why not? And so I blamed Do you know who I blame? TikTok. Because they're all like, yeah, you should resign. And then everyone's like, what do I do now? And I go, I don't know. You resign.

Leanne ElliottIn other news, Apple, you know, not the fruit, the company. You know the one?

midroll (Phil Agnew, Nudge)Yeah.

Al ElliottI'm surrounded by everything Apple sells. Our office looks like an Apple warehouse, I think.

Leanne ElliottYeah. So Apple has its first ever Yeah, so apparently Carol Surface is stepping into Apple's new Chief People Officer role, um, and is taking on everything to do with people and human resources. Previously, that role was kind of combined with the, um, head of the, the retail side of the business, uh, which is a person called Deirdre O'Brien.

Al ElliottWhere was she from, do you reckon?

Leanne ElliottI don't know, but I'd maybe think she has Irish heritage. So yeah, first head of people, which might sound a little bit surprising when you think about Apple having, what, 150,000-ish employees, maybe more. So yeah, it's one, it's a big job for somebody to take on retail and people, but equally, it makes sense to me why those 2 roles were combined. We think about when we talked about on our employer brand episode, the overlaps between kind of internal brand and external brand in terms of customer experience and employee experience. It makes sense to me. But equally, you know, like a lot of organisations now, they're realising that having somebody who is dedicated to people and culture is the best way to go. So yeah, congratulations, Carol. We look forward to seeing what you get up to.

Al ElliottAnd get on the podcast, Carol. Come on.

Leanne ElliottYeah, Carol.

Al ElliottI like the idea that Apple's values are— I hope they're called Apple Core Values. I'd like that very much.

Leanne ElliottOh, I'm so sorry.

Al ElliottI'm sorry as well. What's your third thing?

Leanne ElliottAnd finally, this was a little news article in The Atlantic that caught my attention this week. It was about the work husband and work wife. So yeah, I'm sure everyone listening will know this. You know, you've probably had a work wife or a work husband or a work partner. It's been something that we've kind of noted in both the media and in the literature since 2015. Um, and I've got a definition for you of a work spouse. So it's a special platonic friendship with a work colleague characterized by close emotional bond, high levels of disclosure and support, and mutual trust, honesty, loyalty, and respect. Some people have argued that its connection somewhere sits between friendship and romance, and I get that. I've had a couple of work husbands in my time.

midroll (Phil Agnew, Nudge)You have?

Leanne ElliottOne of them is still very much in my life right now and is one of my best friends. I think it's a really important relationship to have in the workplace.

Al ElliottBecause I'm slightly upset that the people who created this idea of that, when they defined it, they started off work spouse and they went special platonic. And I'm like, that's the first 2 letters of spouse. Why couldn't you have just gone the extra mile and make it S-P-O-U-S-E and go special platonic, other—

Leanne ElliottOpen.

Al ElliottOpen.

Stephen ShorttUnderstanding.

Al ElliottSexual entity.

Leanne ElliottIt needs some work. It needs some work.

Al ElliottWe'll work on that for next week. Okay. So back to the structure of the show. So what we're gonna talk about is we're gonna basically try to aim to, to, to— that's, that's, that's not a great confident thing to say. We're gonna try to aim to. We're going to be answering these, these 7 questions. First of all, what is personality and why is it important? We're gonna defer to Ryan for that, who is the expert in that. How do we assess personality? A bit more from Ryan. How entrepreneurial personalities shape family businesses. Bit from Ryan, bit from Stephen, I think, from there. Unique dynamics of family businesses. Then finally, well, penultimately, onto leadership in family businesses, talking about children and how all that works. And then talking about children managing a successful, successful succession. That's not easy to say. I wish I hadn't written that down.

Leanne ElliottSuccessful succession. It does need a little bit of thought and intention.

Al ElliottSo let's kick off with personality. I think we all have an idea of what personality is. You know, oh, they've got a bad personality, a good personality. They've got the, the kind of personality that does X, Y, Z. What Ryan said was that Hogan, which is the company he works for, thinks of personality as what others think of you. They, they use this fancy term like reputational inventory or something. He's gonna say it, I'm sure, in a minute. And I thought, that's basically your brand, isn't it? Because if we go back to what we said last week or the week before, Jeff Bezos is saying that a brand is what people say about you when you're not in the room. So therefore, Hogan's basically looking at your personality, which is what people say about you when you're not in the room. So let's hear from Ryan.

Ryne ShermanIf you look at the field of personality psychology, sort of academic scientific side of personality, or if you go to even Wikipedia and look up the definition of personality, it's kind of a sad state of affairs because it's really clear that there's actually not total agreement about what personality is. So there's sort of little nuances of difference about what's included and what's not included in personality. But in general, when we're talking about personality, we're talking about individual differences in the way that people behave, think, and feel. Now, some people would say, well, also motivations are included in there, and some people would say, well, personality is a driving and causal force of behavior. At Hogan, we don't really think of personality that way. We really do think of personality in a much more sort of reputational sense. So that is, what do other people think about you, right? What do other people think about the way that you think, behave, feel? What do they tell us about you? How have you behaved in the past according to people who know you? And for us, that's the real key. The real key insight from personality is that reputation that you've earned behaviorally, because that's what's best going to predict how you're going to behave in the future. And at Hogan, that's what our assessments are really about. Our assessments are about predicting how other people are going to perceive you, predicting how you're going to perform in the work place. And so that reputational component is really the central part of what we do. So from my point of view, personality is really the sort of summary of how you think, feel, and act across time and across a variety of situations.

Leanne ElliottTypical psychologists not being able to agree on anything. It depends. But yeah, no, a really great definition there from Ryan. And one of the reasons that I personally love Hogan Assessments and the way their tools work. Now, the obvious follow-up question. Now, we understand what personality is, why is personality important? Now, Ryan has a podcast, it's called The Science of Personality. But Ryan starts the podcast by saying people are the most consequential and dangerous forces on Earth. I asked Ryan to explain this a little bit more.

Ryne ShermanI think if we look around the world and we look at the problems that are sort of facing, uh, humanity today, almost all of those problems are caused by humans, right? And that hasn't always been the case, right? So if we looked thousands and thousands of years ago, what are the most challenging problems that humans face? A lot of those problems were caused by the environment. A lot of those problems were caused by other animals. A lot of those problems were caused by weather, were caused by a lack of resources, a lack of food, no ability to hunt, no ability to farm. There's a lot of problems that our human ancestors faced. for a really, really long time. Humans have solved many of those problems. I mean, okay, it is the case that there is still poverty in the world. It is the case that there's still people who go hungry in the world, but by and large, as a species, humans have done really, really well at solving those old problems. The new problems, the real problems that people face and have been facing for the last several thousand years, are problems of other humans. What are humans doing? Are humans destroying the environment? Are humans destroying each other? I think if we look at what's the biggest impact on human life, it is actually other humans, other humans doing that kind of destruction. There's a war in the Ukraine right now, which is between humans. I don't know how many different species have gone extinct because of humans, because humans have hunted them and killed them off. And that's what I mean when I say— when we say that humans are the most dangerous and consequential force on Earth, that's what we really mean. Like, there's really not— we are the thing. We, you know, we've found the enemy and it is us, so to speak. And so from our point of view, if humans are so powerful and humans are so consequential, it makes sense to sort of understand that thing. Like, what's going on?

Al ElliottIt kind of puts things into perspective when Ryan says we're the most dangerous things on earth. And this is down to our personality, from what I can understand, but we're going to go into more of this in a second. So I can see why personality can't be changed that easily, but how should we try and change it? Is it possible to change it? Like, what happens if you have a personality clash? Is this possible to change your actual personality? We asked Ryan.

Ryne ShermanThe research shows pretty clearly that the personality is pretty stable. That is, people tend to get the same scores if you take the assessment again. whether it's Hogan assessment or any other kind of personality assessment. If you take this, if it's a good assessment and you take it again, you should get pretty much the same score, particularly if you take it in a short time period, like within a day or within a week, even within a month, you get pretty much the same scores the next time. So for the most part, personality's pretty stable. There seems to be some research suggesting that maybe you can, at least to some extent. Now, I think it goes back to that question you asked earlier, which is really what is the definition of personality? If we think about personalities are sort of biology, right? Because we know that there are biological connections. The hormones that we have, genetics are related to how we behave and think. The answer is probably no. You really can't. I mean, that's not technically true. We actually can change. We can change our biology, right? So a couple of clear examples, like one is a strong blow to the head that does actual damage to your brain will often change your behavior and the way that you behave. Which is not a great example, or, well, it's not great if it happens to people, but it is an example of how biology shapes our personality. But other things about our biology can shape how we think and behave too, right? So antidepressants, by some respects, I mean, that's really what they're doing, where they're about changing your hormones so that you behave, feel, think in a different way. So there's sort of biological interventions, but we're talking about non-biological interventions. To change our personality. And there seems to be some evidence that through really hard work, training, coaching, feedback, you can change your personality to some small extent. So it's not huge amounts, right? We know the personality is very stable from time point to time point. But through practice and feedback, we can actually change the reputations that we earn with our colleagues and peers, and to some extent change our personality from that, from that point. I guess the way I would put it is it's sort of like a golf swing or a tennis stroke. And if you've practiced a certain golf swing or a certain tennis stroke for a long time, it can be difficult to change it. You need a lot more practice of that swing, and you need really direct feedback from a coach who says, no, no, no, do this, do this instead. The problem is with personality is Imagine you've been practicing that golf stroke or that tennis stroke your entire life, right? So that's what makes it so difficult to change, is that it really takes a lot of concentrated effort, but, but it can be done.

Leanne ElliottSo I think what Ryan is explaining there is that yes, the research shows us that personality is fairly stable over time and over our lifetime, and changing our personality can be really difficult. But in terms of changing our behaviors through coaching or feedback, that might be more achievable. And what we're talking about there is self-awareness. Self-awareness is the first step to making any necessary changes.

Al ElliottSo self-awareness, if we are not careful, does sound a bit like one of these terms that goes, oh, everyone should be self-aware, sit on a mountain cross-legged. But the fact is that there, I think you've told me before, there's actually kind of a, a monetary value you can put towards self-awareness.

Leanne ElliottYeah. So, I mean, self-awareness is, is often cited as a really powerful capability for any leader to have. And there was actually an article that was published in the MIT Sloan Management Review. Basically, to summarise, it said that successful leaders know where their natural inclinations lie, or know their personality, and they use this knowledge to either boost those inclinations, or those preferred behaviours, or compensate for them, mitigate those less productive behaviours. An interesting study also found that self-awareness impacts a company's bottom line, which sounds almost unbelievable, but Korn Ferry International found that companies with strong financial performance tend to have employees with higher levels of self-awareness than poorly performing companies. So, it seems to me that, you know, understanding yourself is really important, and it's just one of the reasons why assessing personality can be a really powerful tool for leadership development. And taking that one step further, assessing personality is also a great way of gaining the insights we need to make a variety of decisions within our business, as Ryan explains.

Ryne ShermanPersonality, I think, is really important for the workplace for several reasons. So really, actually, it was Bob Hogan, the one, and Joyce, who were the people who really kicked personality in the workplace off as a thing that was going on. And this was for a couple of reasons. One was that employers have really critical decisions to make. It doesn't matter what employer you are, you have to ultimately make decisions about, you know, you can't hire everyone. You have to— so you have to decide, you know, who to hire. You have to decide in some cases who to let go, who to lay off. You have to decide who to promote. You have to decide who's high potential. You have to decide who's a safety risk. All of these are critical questions that employers have to answer, and the data are actually really clear that companies that are better at answering these questions, organizations that are better at answering these questions, are just far more successful. So if you want your organization to be successful, you have to do a really good job of answering these key personnel questions. So then the next question is, how do you do that? How do you get good at answering personnel questions? There's a few possible options. You could flip a coin and say, oh, I'll just decide who to hire at random. You could give people a lie detector test. You could interview people. That's a very common technique for deciding who who to hire or who not to. What personality assessments offer is a way to make decisions about people that is scientifically based. There's lots of research showing that personality predicts pretty much everything, every meaningful difference in life outcomes that we care about. It predicts criminal behavior. It predicts substance use. It predicts substance abuse. It predicts marriage. It predicts marriage longevity. It predicts actual longevity, how long we live. It predicts workplace performance really quite well. So, that's one way to decide as well is to use a personality assessment because we know that this actually predicts workplace performance.

Al ElliottI mean, as business owners, we have to make decisions. I mean, that's a fact. And the most difficult decisions tend to be around people. Who do you trust? Who do you hire? Who do you fire, etc., etc.? As Ryan says, we can use the CIA technique with lie detectors and all that. kind of thing. But the fact is that Hogan seems to be able to do this without too much sort of intrusive examination. So if personality accurately predicts the future behavior, then it stands to reason that we measure that personality using an inventory like Hogan, or Hogan is going to measure how someone might act in a certain situation. What's interesting about this is that Ryan wrote an article back in 2015 about Donald Trump. This is way before he got elected in 2017. And I think he accurately predicted what it'd be like to be— what Donald would be like, or Trump would be like as a president. I'll link to this in the show notes. He basically said he was low on diligence, low on prudence, and high on bold and ambition, which essentially just predicted— however you feel about Trump, I don't think you can dispute that that was— that sort of personified his entire, um, administration, his entire 4 years. But this was also really interesting. He suggested— this is what Ryan suggested— was that, and I'm going to read this, the personality of Mr. Trump also highlights the characteristics of those who will likely support and vote for him. In other words, we like people who are like us. So if this is the case, then that kind of almost did a sort of snapshot of the prevailing personality of the American culture in 2015. I thought it was really interesting. Here's what Ryan said.

Ryne ShermanNobody's quite as public as Donald Trump, right? I think— I do think I just read today that Instagram or Facebook or both are letting him back back on, and he's actually, at the time that he was kicked off, was the most followed person on Facebook. We know a lot about Donald Trump, so from my perspective, it was relatively easy to write an article about his personality, to frame his stuff, his personality in those terms. Looking back on it, yeah, I think it did pretty well play out just like we would expect. There are the positives and there are the negatives. It's actually really funny. looking back at that article and the comments on that is that I got compliments and complaints on that article from both liberals and conservatives. Liberals said I was too nice and they complained. They said, you were too nice to him. He's awful, horrible, terrible person. Conservatives said I was too mean to him. I cut him down too much. I feel like I probably hit the nail on the head. If everybody agrees that I'm wrong for opposite reasons, then maybe it's not so bad.

Leanne ElliottI think what Ryan's really demonstrated very well there is that using a psychometric can give an objective opinion. It's not whether you like them or not, you agree with your politics or not. You're given an objective opinion. I think he's clearly done that, as he said, by having equal compliments and equal complaints.

Al ElliottWhat's interesting is that we're talking to Ryan, who's obviously got lots of practical application, but also scientific. Then we're talking about someone, Stephen, who actually uses it in the real world as well. And so what's funny is that Stephen forgot to kind of use this inventory for his own family business when he took over.

Stephen ShorttOne of the things that we've discovered through this— now, we work with psychometrics. Our business is psychometrics, personality profiling. But the cobbler's kids have no shoes. We were completely almost ignoring our different personalities in the business and butting heads and how similar we were in some things and how different we were in some things.

Leanne ElliottSo we've made a case for psychometrics being useful, but of course, if you're a regular listener, you'll know that not all psychometrics are made equal. Here's Ryan to explain.

Ryne ShermanThe thing about personality assessments is there's no, there's no regulating body, uh, other than the courts, which, you know, sort of, uh, are around personnel and hiring decisions. Other than that, there's no real body to regulate, which means that anybody can create a personality assessment. Anybody can create one today, tomorrow, and just start selling it. Um, And one of the big misconceptions is that many people think that they're all equally valid, they all work equally well. But unless you actually have the data to prove that your assessment works, that your assessment is fair, that your assessment is unbiased, it's— I think it's just too easy to fall into a trap of, well, you know, that all personality assessments are equally valid. You really need those that are scientifically backed, that have evidence for their validity, or that is their accuracy. and that have evidence for their psychometric properties. They should be able to offer you a technical manual. You should be able to evaluate just the quality of that assessment from those materials. And if you can't do that, then the chances are that you have a pretty bad assessment on your hands.

Al ElliottSo of course, the Chief Science Officer of Hogan is going to say Hogan is great. Of course he is. But we wanted to ask Stephen why he chose Hogan over what, the 100, probably 100+ other inventories out there?

Stephen ShorttSo Hogan is our preferred personality inventory. And the reason that I really like Hogan, because first of all, it's in the workplace. It's predominantly about how you are perceived in work. And the perceived bit is also important. It's not about your identity, it's about your reputation. So how others are how others view you. It's not how you see yourself. It's the age-old thing of we judge ourselves by our intentions and we judge other people by their actions. So Hogan is actually able to cut through an awful lot of that. And when you're looking at your report or when you're looking to report the other person, it's actually how they're likely to be perceived. So you can get a much clearer understanding of, oh, maybe that's why everybody's giving out to me about this thing, because I am flaky or I don't feel deadlines because of this. So I find it really interesting, and it's also a great way to be able to show people, A, this is where you might have some unconscious biases, but B, this is how you're likely to approach a problem. This is how your parents are approaching a problem. Can you see a massive gap in this scale? That's why you're clashing and butting heads. Let's look at it from each other's point of view, and let's find the middle ground and have those conversations that are not attacking. Um, and not saying, oh, you're wasting our money. It's like, no, I'm investing in software that we need to grow for the future because things have changed, etc., etc.

Al ElliottI'm thinking, Leo, perhaps we should have done a Hogan before we started our business. It's funny, I'm very like, oh, I've got some great ideas, and then as soon as they're half done, I lose interest. Whereas Leanne's very much like, well, you know, let's just plod on and get this finished. And, you know, and anything that's finished, anything you see that's finished is because Leanne's either finished it or shouted at me So what I did like about what Stephen was saying was that Hogan is relatively simple to understand as a non-psychologist, as just a normal person. Of course, there's lots of complicated things going underneath the water. But for people like me who like simple things, then Hogan is brilliant.

Stephen ShorttWhat we really liked about Hogan is, A, the depth of it, there's 27 scales, 0 to 100. And like, you can get such holistic nuance to somebody, and you can really dive into the subscales and get a really, really clear picture of how they're likely to be seen. And we found that clients respond really well to that and they can understand it. They can understand the concepts very easily, where they are in those scales and how they go together. And it's scientifically very robust. There's a lot of history and a lot of experience gone into it. I'm not a data-driven person. I'm not a process-driven person. I'm much more about the practical side of things. And I just know it works. Like when I use it with people, I can see it works and I can see the benefits of it, so that's why we continue to do it.

Leanne ElliottSo when you're choosing a psychometric tool, being aware of the science and research behind it is really important, not only so that you know that you're measuring the right thing and measuring it consistently, but that you can also get the data you need to make confident decisions within your business. As Stephen said, when it comes to being robust, Hogan is one of the best out there.

Ryne ShermanI think we have the best global norms. anyone's ever created about personality, and we're continually updating those all of the time. That's a big part of the data science mission, is continuous improvement of our assessments and our norms. And then the third part is our research archives, is maintaining all of this knowledge that we have, right? All of the data that we gather, all the research and studies that we do, keeping those organized so that we're just always accumulating more knowledge Keeping that at our fingertips is a really important part of what I do or what my teams do. So when somebody takes a personality assessment, if it's a true/false test or if it's a 1 to 5 rating scale test, you get some kind of a number at the end of that test. So let's say you took a 4, a very short test, a 4-item test on humility, and it was a 1 to 5 rating scale. You have a possibility of scoring anywhere from a 4 to a 20. You could have marked them all a 1, you could have marked them all a 5. So you have any possible range between a 4 and 20. But the problem is that number itself doesn't really mean a lot to people. If I got a 12 on that test, what does that mean? It's kind of hard to say. So what we do is we actually convert those raw scores into norms. And we do that by saying, okay, well, just the same way like a doctor might with height or a doctor might with weight, we say, well, people like you who take the assessments, What's a typical score? What do people typically get? What's the standard deviation? What does that distribution of scores look like? And so what we actually do is we report back to people where they fall in that distribution. So when I say a norm, that's what we're doing. We're saying this is the distribution of scores. And when we give people a score back, it's a percentile score. So maybe, maybe a 12 is at the 50th percentile. So, you know, about half the people score above me and half the people score below. But that's what that helps give that score a much more interpretive meaning. And you can really understand much better what that means if you score in the 95th percentile versus the 5th percentile, for example.

Leanne ElliottRyan explained norms really well there. And I think one that you're probably very familiar with is when we talk about IQ. You probably know that an average IQ will sit somewhere around 100, a score of 100. And you also know if you hear somebody with a high IQ, Or if you hear an IQ of like 145, 160, you automatically know that's a really high score because you have the context. And that's what norms do. They give us the, the context of our scores in relation to, to other people.

Al ElliottOkay. So family businesses start with an entrepreneur. I, I don't think there's any other way it can possibly start. And there must be this kind of trend with entrepreneurs cuz we're all very different. So we must have some common traits. So let's listen to Ryan and hear what the typical personality of an entrepreneur is.

Ryne ShermanSo we have, data on hundreds and hundreds of entrepreneurs. Gosh, we're probably getting into thousands now of entrepreneurs who have taken our assessments at Hogan. So there is actually a really clear profile that we see with entrepreneurs. It's just quite amazing. Every time we collect a new entrepreneur sample, I can just plot out what that profile's going to look like because it just always comes back the same. A few things that we see. One is that they tend to score really high on a scale that we call excitable. Excitable is about volatility, really feeling emotionally attached to lots of things and being willing to change and flex and having a lot of energy towards projects. That's what we see with a lot of entrepreneurs. Makes a lot of sense. They're really flexible about change. What they want to do is go, no, this isn't working. Get rid of it. Stop. Do something else. Change something new. Entrepreneurs are really good at disruption. Part of it's because of excitable. They're also very high imaginative. They tend to be creative. They tend to think in new ways. They tend to score pretty high on ambition. They tend to score pretty high on what we call inquisitive, which again is about creativity. So basically what we see with entrepreneurs is they see problems. They see a lot of problems. They want to fix those problems. They're really committed to doing whatever it takes to fix those. They are happy to break down current systems, to blow everything up, to restart, to fix that particular problem. That's what makes them so great at what they do is that they can say, okay, this is bad. Let's get rid of that. Let's change it. They can disrupt whatever's going on. The problem is when you start running a really successful business, if you're an entrepreneur, you started this business, it starts to grow, it starts to become successful because you did solve some problem that was really critical that people needed solved. All you're looking for is more problems to solve. Many times, that's not what your business needs. Your business doesn't need more change. What it needs now is stability.

Leanne ElliottIt needs someone to steady the ship, right?

Ryne ShermanYou've done all the disrupting and you've done all the changing, and now it needs someone who can really fine-tune and get it on that long-term progression. And many cases entrepreneurs aren't very good at that. What they're very good at is disrupting, is right, making a lot of change.

Al ElliottSo first of all, thanks, Ryan, for us entrepreneurs thinking we're special and you're saying we are the most predictable type of people out there. Thank you. But I think it's really, if you are an entrepreneur, you will resonate with that. Imaginative people imagine. So when they think they've imagined comes to life, they imagine some more, which means that we are probably really bad for business. We're great for starting them, but if you get us halfway through, we are going to fuck it up badly because we're gonna go, uh, like Elon Musk, who took over Twitter, went, right, get rid of everyone. We're gonna do this. We're gonna do this now. And it's like, well, this is an established business of 15 years. Alright. Hadn't made much money, but still That's a different discussion for a different day. So when we're talking about family businesses, when Leanne and I were first talking about it, in fact, we talked about it with Stephen, I think, was we talked a lot about sort of Sopranos was the first thing that came to mind, wasn't it? Sopranos, the, um, if, unless you, if you've potentially lived on the moon for the last 20 years, then Sopranos is basically about a mafia, uh, family. But they're not, they are, some of them are family, but basically describe them as family. It was interesting that we immediately thought, I wonder if like family business, business and the mafia? Are there any similarities?

Leanne ElliottI think that's interesting, is it? Because when you think about kind of famous family businesses in pop culture, they're the ones that tend to spring to mind, you know, things like The Godfather or Sopranos or, you know, or the mafia, or, you know, even with, um, like that TV show Succession. Oh yeah, I can know it's meant to be based on the Murdochs and meant to be kind of legit, um, but even some questionable activity happening there. So it does make you wonder, is there some overlap between entrepreneurial organizations and criminal organizations?

Ryne ShermanIt's a really impressive dataset collected by some of our colleagues in the Netherlands who actually were able to— I don't actually know how they did this. They were actually able to sort of not necessarily infiltrate, but get in with some organized crime organizations. and get assessments from individuals there who are not currently in jail, right? So typically, or in prison, right? So typically when you have, you know, we have other prison samples at Hogan, right? But these are people who are criminals who got caught or who were convicted anyway. These are individuals who are not convicted, who are not, you know, some of them may be under investigation, some of them may be being monitored, but none of them have been convicted of a crime at the time when they were assessed. So And it's, as you might imagine, it's a hard sample to get. So it's not a huge sample. I think we've got about 60 or 70 folks in that sample. And the remarkable thing about their profile is just how similar it looks to that entrepreneurial profile. I would say sort of key differences here. So a couple of things that I think stand out when we look at entrepreneurs and the way that we look at criminals is that they're both right in for destruction. They both are creative. They both can look at avenues for success. They're both looking at ways that, hey, how can I achieve? How can I solve some problem? How can I fix something? The difference is really about laws. It's how strict are the laws? In fact, there's a business paper many, many years ago, I think it's a very overlooked paper, where this business professor essentially theorized that there's some fixed number of entrepreneurs in any population, and how many of them go to prison versus succeed really depends on how strict your laws are. If you have really strict laws, You put many of them in prison. If your laws aren't very strict, if you're pretty loose about what can happen, then many of them go on to start these thriving businesses. So that's one of the key differences is just how strict the laws are locally. But the other difference that we see with entrepreneurs and organized criminals is there tends to be an empathy component. So we see a little bit more empathy in the entrepreneurs. At some deep level, the entrepreneurs might actually worry about harming other people. They really care more about that, whereas the organized criminals have a little less. The other thing that we tend to see, and we don't have great data on this, but it seems to be the case, is that background. Elon Musk has been a highly successful entrepreneur, but he didn't start from nothing. His parents had a pretty That provided a pretty strong financial base for him to start off with, and he also got a pretty good education. In the criminal world, we're often talking about people who don't have that. They didn't come from a strong socioeconomic background. They didn't come from a privileged area. They didn't get to go to the best schools or anything like that. But they have the same desires that those entrepreneurs do. They want to disrupt. They want to change. They see problems. They see ways to fix it. They see ways that they can be involved. Um, and, and they want to gain status. And, um, they— so they'll come up with different creative means. If you don't have access to sort of quote-unquote legal means for achieving status and success, they will resort to illegal ones.

Leanne ElliottDid you know that the UK's number 1 management podcast— that's us, by the way— and the UK's number 1 marketing podcast are both on the same Podcast Network.

Al ElliottWe actually have a lot in common. We both use behavioral science to help people do better at work.

Leanne ElliottAnd we both had to wrangle Rory Sutherland on an episode.

midroll (Phil Agnew, Nudge)And 2 out of 3 of us are devilishly good-looking.

Al ElliottAnd you're not gonna say which. Fel, host of Nudge, UK's number 1 marketing podcast. It's brought to you— we need to do this in 3s—

Leanne Elliottthe HubSpot Podcast Network, the audio destination for business professionals.

midroll (Phil Agnew, Nudge)Seamless.

Al ElliottSeamless. Tell us about your latest episode, Phil.

midroll (Phil Agnew, Nudge)We've just done an episode on fake fandom and how New York indie bands are paying agencies to create fake TikTok videos about how much they like their work. And we talk about the behavioral science behind fandom and how that encourages people to enjoy the music and all of that good stuff and do some big things about how this affects the world of politics, business, and brands as well.

Leanne ElliottIt is. It's such, it's such a good show. course, you'll hear all the stuff you want to hear about how to grow your business by using behavioural science in your marketing. But there's also just some really interesting episodes that'll be right up your street. Personally, I enjoyed Can Balsamic Vinegar Make Beer Taste Better?

midroll (Phil Agnew, Nudge)It can.

Leanne ElliottAnd Are We All Just Status-Seeking Monkeys?

midroll (Phil Agnew, Nudge)I am.

Al ElliottGo and listen to Nudge wherever you get your podcasts.

Leanne ElliottBut come back.

Al ElliottYeah, come back.

midroll (Phil Agnew, Nudge)Definitely come back because Nudge isn't as good as this. So come back.

Al ElliottI've got that out.

midroll (Phil Agnew, Nudge)Keep that in.

Al ElliottI love this. I love the fact that criminals who are not caught are just very good entrepreneurs. They see a problem, but they're also vitally and highly and ultra aware of the constraints that they've got when producing this solution to this problem. Like, what was that story about the gold heist you told me the other day, that every— every ring or something being sold?

Leanne ElliottSo basically, 1980s UK, 6 6 men broke into the Brink's-Mat security depot near London Heathrow Airport. I think they thought they were stealing cash, but accidentally stumbled on gold blocks that were worth, at the time, £25-26 million, which today is, what, 3 or 4 times the value? 4 of those 6 people were never caught. It's estimated, because of the vast amount of gold that they found and how they got rid of it—

Al ElliottFenced it, I think is what it's called. Fenced it.

Leanne ElliottIs that what it's called? Fenced it. Um, that, yeah, that if you have a piece of jewellery, gold jewellery in the UK, um, that you bought after 1984, chances are there is a little bit of it that you could originate back to this, this stolen gold supply.

Al ElliottI love it, I love it.

Leanne ElliottSo giving the population what they want without being too concerned about the constraints of the current regulations in place. Now call me crazy, Alf, but this reminds me of a young entrepreneur Who established his first business by selling beer outside of regular UK licensing hours.

Al ElliottYeah, that was me. That was me. And it was, it was ostensibly legal, but you notice that I don't use the word 100% legal. So if you do want to hear how I broke the law and how the law won, then go back to the episode at the end of December where you've got my story and Leanne's story. story, um, and we tell you all about it. So growing up in rural Lancashire, it's kind of weird because when I think of family businesses, I think of farm shops. I think of farms, I think of shops, farms, shops, and farm shops.

Leanne ElliottFarms and shops and farms and shops.

Al ElliottSo I kind of think of, um, of just family businesses, whereas actually there are some huge family businesses like Guinness is started off by Arthur, Arthur Guinness. And it's, um, and he starts off with this idea that, that people would have— he's building a business for his children, his grandchildren. Now, as a, oh, there's a butterfly kind of entrepreneur, I kind of find anything longer than a 10-month plan fascinating. I was wondering whether the Irish big family, Catholic family, lent itself more to family businesses than other countries. So I asked Steve even. Is there anything to do with culture, country in family businesses?

Stephen ShorttSo, funnily enough, the term family business really only came into existence in the last 75 to 100 years with really the Industrial Revolution and people really forming these huge businesses that have multiple offices and headquarters. Because before that, all businesses were family businesses. Like, if you were setting up a store or a a service or a farm or anything else, who are you going to pay? Somebody down the town a couple of bags of flour to work, or are you going to, hey kids, we've had 16 of you, start working? So family business as an outlier almost really only happened in the last 2 generations. And people started to use the term family business, especially in America, like the mom and pop. It was Originally, the mom-and-pop thing was kind of, they're not really professional, they're not really serious. But then actually family businesses started leaning into this because they're values-based and they have a longer view of the client and everything else. So there are people who prefer to work with family businesses, but there are some people who prefer to work with corporates. But you mentioned Japan, and Japan to me is fascinating. So the oldest business in the world is a small hotel in Tokyo, and dying to get out to see them because it is, it's, I think it's 100 generations old or something outrageous like that. But the thing in Japan, and you can look this up, this is true, 80% of adoptions in Japan to this day are people who are 30 years and older. It is, adoption is huge in Japan, but not of kids. It's people who are running family businesses who aren't so sure that their junior has what it takes. So they find an executive, they find somebody that they think can carry on the business, they adopt them legally at 30 years of age, they take the name, they do everything else, and it becomes a family business. But it's a family business by adoption, not necessarily because your bloodline is actually flowing through the industry or the business for generations, which is fascinating to me.

Leanne ElliottThat is really interesting, taking the concept of family businesses to an entirely different level. As we said, Al and I were very small family business. It's just the two of us. And one of the dynamics we've had to work really hard on, and we still do if I'm being honest, is separating work life and family life. It's really tough. I mean, if you think about going out for a drink with your mate from work and not talking about work, of course you do. You just do. That's the way it is.

Stephen ShorttSo, here's Steven's thoughts on one of the most challenging dynamics of working So if you've got family business owners, a family business who they talk about the business all the time, they have dinner and every dinner devolves into a board meeting or a conversation about the business, which you don't get in other families because you're not working together as well. I think there's a lot of extra baggage that happens because there is not just the professional dynamic, there's also the mother-father dynamic. child dynamic and where the authority lies. And you might, in a company, you might feel, actually, I'm the marketing director, I've done— I've earned my chops, I know what I'm doing, I can have a professional conversation with the CEO and say, look, the direction that we're going in is wrong, we need to be on TikTok, we need to be doing all this other stuff where the kids are. And you can have a professional conversation. There are kind of rules of engagement around how those meetings go. even in a casual working environment. Whereas with the parents, sometimes there can be a, no, son, don't tell me what to do. I'm in my living room, you're in my house. And there can be that element of tension. And it's actually one of the things that I tell people to do when you're having meetings like this. Don't have them in the house, don't have them in the office. Go out for dinner, go somewhere else, go to a rugby match, go to do something else that is not Either of your territories, for want of a better expression.

Al ElliottThis is gold. We've only just recently learned this, and we now go out for coffee if we want to talk about anything about business. Because if you have an argument in your home, like, I'd love to say that Oblong HQ is this massive complex like the Apple Park, but really it's just a 3— a 2-bedroom apartment where one room is our office. So if we're sitting at the dinner table when we're eating dinner and I say, I wanna do this kind of thing. And Leanne goes, no, I don't. Because we're in the context of our home, it feels like a personal disagreement. I don't wanna say the word argument, a personal disagreement, which in itself is personal. Whereas you go outside, you go somewhere else, you have a cup of coffee, you sit down. I've got these ideas. And we've done it and we've fallen out when we're out. But then almost like when we come back in, it's like, okay, that was a thing. We didn't agree. that was done. So we'll dive into the 5 Ps that Stephen comes up with in a second. But the first one stands for purpose. And it's really interesting because it contextualises all of your discussions.

Stephen ShorttEverything in succession planning, everything always comes back to the first P, which is the purpose. What are we here to do? I mean, are we here just to get into this nitty-gritty? Or are we taking a much longer view? And family businesses tend to take a longer view because there is that sense of succession, Actually, Arthur Guinness from Guinness, you're familiar with one of these, the small Irish brand. He had one of his tenets was think in terms of generations yet to come. So he wasn't even thinking in quarters or years or 10-year targets. He was thinking about great-grandkids that haven't even been, like the grandkids aren't even here yet. So his thinking was so grand that he was thinking much more long-term and Anecdotally, it was like he didn't get as flustered with these things. He could see them as being petty or whatever. With family, look, I mean, I have a— I use a phrase a lot, which is blood is thicker than water, but it sure boils faster. So brothers and sisters working together, for example, they can get under your skin much quicker than any other teammate. But one of the things that I've found is that you can have the blowout or have an argument And people can be shocked about, oh my God, they're having a big blowup. But then 2 minutes later, they're sitting down in a board meeting or a meeting and the air is cleared. They've had that quick bash, but they have this sense of, okay, right, we need to get on with this now and we'll sort this out later. So I think that there is a sense that when you're about to blow up, if you're remembering Look, we're not just in this for the quarter, we're in this for the long term. Stuff, petty stuff starts to get dissolved away.

Leanne ElliottAnd I think that is the interesting dynamic about working with family. On one hand, you're more likely to get dragged into a heated debate, shall we say, when you're very familiar with somebody. But equally, you're probably more likely to go, okay, let's park this, let's move on. We have something else to focus on now. It is an interesting dynamic. But of course, there are other ways to join a family business, and that's to marry into it. We asked Stephen about the differences he's observed with his friend and client Evan, who married into a family business.

Stephen ShorttSo, yeah, so he's a friend of mine for many years. We were very friendly competitors when I was in the language travel business, so he was very gracious to share his story. He had the same issues in terms of there needed to be communication. What was the plan? What was the succession plan for this? What were they going to be doing? Where were they aligning? What were their expectations? What was his expectations? But I think what he probably— and he didn't say this in the podcast, he didn't say it to me either, but I would imagine when you have your own family, you can be a little bit more kind of, ah, for fuck's sake, just tell me what you want to do. You can kind of lose the cool a little bit. not so much with the in-laws, I suspect, and feeling of going, maybe I can't have a go, or I have to be a little bit more patient, and I have to swallow that a little bit more. But I mean, it was a very easy transition in the end. Like, there was— and he talked about it in the podcast— that once they were able to kind of understand the expectations for the other people, they actually were able to accelerate a couple of those things and both sides got what they wanted. Evan was able to have the freedom to do what he wanted in the school, to make the changes and to grow the business. And the in-laws were able to walk away feeling, okay, it's in safe hands, whatever we've built in, we've done, and it's not our kids, but it's still in the family. So I suspect it was a little bit more polite perhaps than a traditional family business when you have a couple of moments of tension. But as far as I know, they're, they're still, um, they get on still very well.

Leanne ElliottWhen we're talking about the, the current generation within family businesses, or what are typically the parents within businesses, they're also the leaders. And having the right leadership in place, as you know, is critical to the success of all businesses. In fact, there was some research done by PwC recently, and they found first-generation businesses, 42% had double-digit sales growth, but by the 5th generation, only 22% did, and 48% are only in single digits. So reasons for this slow growth can be things like risk aversion, market changes, and succession problems. But another key issue can be the misalignment of leadership around the company's purpose, values, mission, vision, and brand. So it seems safe to say that picking the right successor to lead a family business can be challenging, and perhaps a little bit more emotionally charged than in your regular business. But before we dive into that, let's remind ourselves of the importance of leadership. Here's Ryan.

Ryne ShermanThe most obvious place that personality can help is with leadership. So there's a lot of data over the last several decades on leadership and about having effective leadership and having the right leadership in place. Basically, when the right leader is in place, organizations thrive, the individuals who work in those organizations thrive, the individuals who live in those communities thrive. When the wrong leaders are in place, really bad things happen. Organizations fail, the individuals suffer. I think there's really clear ones if we look— this is true whether we're talking about corporate organizations, right? You can look at the organizations like Enron and say, wow, that's not a great place to be, or an organization like Apple, and we're, okay, that's a really thriving organization. Getting the right leaders in place is really essential. Personality assessments, that's one of the big things that we do at Hogan is use personality assessments to help organizations find their future leaders, to find those right leaders to put in place. In the corporate world, we know that the CEO is responsible for somewhere between 20% to 35% of a public company's stock price. What's that all about? That's all about getting that right CEO. Again, we've talked about in terms of content, in terms of knowledge, in terms of experience, but that's relatively easy to evaluate. The much more challenging thing to evaluate is their personality and are they going to make really, really bad decisions? I'll give one example that's clear is with Jack Welch. who pretty much ruined GE through— I mean, he was named like Times or I think it was Time Magazine Man of the Century or Leader of the Century or something like that. But unbeknownst to people on the outside, he was completely ruining GE, which was this top 5 company globally and was just completely ruined mostly by his personality. It's actually quite interesting. One of the things that he said was that leadership is all about charisma. I mean, that's what he said. Leadership is all about charisma. It's all about charm. It's all about convincing people, persuading people. We don't think that that's what leadership is about. We think that leadership is about building a team that's going to be really effective and productive. I think it just really underscores the point that getting those right leaders in place is really critical. And personality assessments is, in my view, the best way to do that.

Leanne ElliottFamily businesses, as we've said, start with entrepreneurs. And entrepreneurs, sorry Al, have a very specific personality profile, and that might not always go very well with a growing business. So as a business owner that's growing your business, whether it be a family business or otherwise, looking at leadership expertise and approach, both now and what you'll need in the future, is gonna be a vital step in ensuring its survival. Here's Ryan's advice.

Ryne ShermanSo what we find with many entrepreneurs is that it's really, really valuable to have an exit plan, is to do what you're good at, is to say, okay, I'm really good at disrupting. And once we've done the disrupting, I don't need to disrupt any further, because that's what they really are. That's really what they want to do. An alternative is to have a number 2 who works for you, who can sort of pull the reins in on some of the disruption, who can say, hey, We have a plan. Remember, this is a good plan. We've agreed to the plan. We need to stick to this plan for now. We don't need to— because the reality is that while many people get inspired, there's a lot of people who go, wow, that's right. We need this change. This is something we need to do. Most people, there's about 90% of people can't handle constant change. Entrepreneurs love constant change. They love, we're going to do something different every day. Most people can't handle that. Most people want some modicum of predictability. They want to know, okay, I know what's going to happen today when I go into work. I know what I'm expected to do. When entrepreneurs are in charge for too long, you lose that expectation, you lose that sense of security, you lose that sense of predictability and order and structure in your life, and those people just quit. They get burned out. That's one of the real risks with entrepreneurs staying into the role too long is that they'll burn their Yeah.

Al ElliottAnd I think that something that Ryan says there is that entrepreneurs entrepreneur, if that's a verb. Well, it is now. But I think the fact is that that's what they do. But what happens if you have, you know, you have a child who is not an entrepreneur, they're more of a CMO, they're more of a chief operating officer, they're more of an artist. You know, it's kind of tough in that situation. So, We're gonna come back to the family dynamic in a second, but we have to be realistic. The fact that the entrepreneurs who started businesses 40, 50 years ago are ageing and they're probably in the baby boomer generation. What happens now?

Leanne ElliottI think you're right. That is a really interesting dynamic of family businesses and, and having that, you know, current generation CEO or MD that is ageing. We heard from Ryan before that personality is fairly stable. but it can change under particular circumstances, and ageing is one of them.

Ryne ShermanWe do know that as people get older, their personalities change in more predictable ways. So as we get older, we tend to become more conscientious, we tend to be more rule-following, we sort of learn the rules of society and find out that that's actually pretty rewarding to follow those. We tend to become more agreeable, we try to get along better with people, particularly as we move into the workplace. We realize that, oh, the way to succeed at work is to sort of get along a little better. So we become much more agreeable. We tend to get a little more extroverted as we get older. We also tend to become less neurotic, which is— or another way of putting that is become less emotional, become more emotionally stable as we get older as well. So there are these sort of common trends that everybody follows.

Leanne ElliottI think a big one there is what Ryan said about becoming more risk-averse. And being risk-averse and being an entrepreneur aren't typically things that go hand in hand. Stephen also identified the older personality as a factor and what it means for a family business.

Stephen ShorttThere's another phrase that I use, and I use it a lot in keynotes and workshops, which is, what got you here is not going to get them there. And when you have a current generation that is risk-averse and they've built it up, the blood, sweat, and tears, and they're looking at the next generation, especially an unconscious bias of, actually, we had to sacrifice so much for you to be in this position. You never had to sacrifice that, and now you're taking it for granted. There is a real unconscious bias of, your change could wreck this because we know what we've been doing for the last 30 years is keeping us here. But actually, if you don't change, you're going to get stomped by the market. So The next generation sees the world, they've grown up in the world that they're going to be living in. They know the changes that the company needs because they're saying this is outdated or that's outdated. So there is a big tension pull between those 2 areas, and that's somewhere where we can have really in-depth conversations. And having those personality reports like Hogan makes it so much easier to have those conversations.

Ryne ShermanAs a researcher, out in Hawaii who was studying personality and the structure of personality. So which traits go with which traits? And he was doing this in little children. And he was having teachers rate the kids' personality, 3rd graders, 4th graders, 5th graders, 6th graders at the university school in Honolulu, Hawaii. And he had collected thousands of these teacher ratings and done some factor analysis to try of understand what the structure of these traits are. And then he just said, okay, well, I'm done with that study, and eventually retired. And that dataset sat around for about 30 or 40 years when another researcher at the University of Oregon named Lou Goldberg said, hey, wouldn't it be great if we could go find those people and see how they're doing today? And that's actually what they did. They got a grant, they went and found these people, to find out sort of, you know, what are they 30 or 40 years later, right? So when you're in 3rd, 4th, 5th grade, we have teachers' ratings of your personality. And then they actually brought thousands of people back to the Kaiser Permanente Hospital in Honolulu, Hawaii. And they did all kinds of things, medical tests, they did interviews, they had them take more personality assessments, more modern personality assessments. But one of the things that they had was video-recorded interviews of their sort of life history. When I met with Lou Goldberg and we said, hey, wouldn't it be really cool if we could code those for behavior? One of my colleagues and I had been spending a lot of time coding behavior from actual live interviews. He gave us hundreds of these videos. We went back to our lab in Southern California, gave these videos to our trained research assistants who then coded how these people behaved in videos. Again, put all these pieces together. We have what your teacher said about you in 3rd, 4th, 5th, 6th grade, and then we have how you behaved 30 to 40 years later in a video interview. We measured things like how frequently do you talk, how creative do you sound? We measure things like how anxious and nervous do you feel in the interview?

midroll (Phil Agnew, Nudge)Right?

Ryne ShermanWe were able to predict how you behaved in that interview based on what your teacher said about you in the 3rd, 4th, 5th, or 6th grade, which I think is pretty amazing, right? So I think that really speaks to when we're talking about stability of personality, right? So your reputation when you were little predicts how you behave when you're older.

Leanne ElliottWe can predict using, using personality metrics, using these behavioral this behavioral coding, how somebody will act in 30 years' time based on how they are as a child.

Al ElliottSo this is fascinating. So potentially, parents at a very young age will have instinctively a good idea of whether their kids are gonna be good enough to take over. Not even good enough, because that's a really judgmental thing to say. Are gonna be suitable to take over the reins of perhaps the position they're taking over. Now, what happens if you look at them and go, no, that's not going to work? Do we straight up tell them they're not getting involved? We asked Stephen.

Stephen ShorttI just did a video last week of how do you tell a child that they're not getting the business? Because there are times when you're looking at it going, look, you don't have what it takes. You don't have the personality, you don't have the hunger, the drive or whatever. And there's all kinds of things that you can do. I mean, for me, when it comes to the next gen, the current generation of family business, there are 4 S's of what you can do with a family business. The first one is stop. So if the current generation tragically dies or just retires and there's nobody to take over or whatever, the business just stops. It's just current generation decides, well, I'm not going into that office anymore. Shutters down. Boom. That's it. Stopped. That is my third least favorite. The second one is sell. you can decide, okay, my kids don't want it, or I don't want to give it to them. I'm just going to sell the business, get the maximum I can for the amount of hard work I put into it. I'll give it to them in an inheritance or whatever, and I'm going to go off and sail around the world on a yacht. Whatever it is you want to do, if that's what you want to do, brilliant. There's plenty of specialized services companies that can help you to maximize that tax law, everything else. That is my second favorite because it's a cleaner way of making sure that everybody's The 3rd S is survive. That is my least favorite because survive is when they put somebody in place that is really just a caretaker, somebody to just keep things ticking along, don't rock the boat. The problem with that is the market is going to change, your competitors are going to start catching up. And for me, survive is just a very long, prolonged, painful stop that you have no control over. You're just kind of bouncing along. So it's my least favorite option. My favorite option is scale, the final S, which is putting the right people in the right place to scale through the generations to actually make a difference in the generations. So an example that I had with a client of mine who's actually a friend of mine as well, he is the kind of the typical CEO out there driving the business, meeting people, networking, negotiating, bringing in stuff for the business. They're about $3, $3.5 million in revenue. His son is starting to make moves to say, yeah, I'd like to join this. I like this. But he's not a CEO. He's not an out there. He's not a gregarious type of guy that's going to be out there pounding the pavement, coming up with ideas and being creative. Great guy and very process orientated, very detail orientated. So he's going to be much better in a COO-type role. So he's a great operator, or he will be a great operator. He has the personality, he has the attributes to do it. So what we're looking at doing, it's not going to be for a couple of years, but when the succession plan comes in, we're going to be looking for a hired gun, an external CEO. And we're going to say, okay, here's the plan. You've got 10 years as the CEO. We're going to pay you a ton of money. You're going to get bonuses here, there, and everywhere. You're going to take the business from $3 to $12 million over the 10-year period. You're going to really drive this business on. My son is going to work alongside with you as the COO, learning everything about the business. Then in 12 years' time or 10 years' time, whatever, when you've got us to that $12 million, we're going to give you a massive golden parachute. Off you go. You can now go and be a gun for hire for someone else and join a bigger company. And that's their progression plan. That's their personality, their ambition, driving and growing. Then the son will step in as the CEO. And once the business is at that size, then it's about maintaining and managing and being able to keep that on the straight and narrow. The example that I really use with this is Apple. Steve Jobs, the quintessential kind of highly creative CEO, really only looked at new products and marketing and that's it. Everything else was handled by Tim Cook. Apple, hugely creative, growing at a huge pace, really outperforming the market in terms of products, in terms of design in terms of everything else. Then Steve passes away, Tim Cook becomes the CEO. They haven't really invented anything new, but they've never been more profitable because they're at the size that CEO Tim Cook is very process-driven, makes sure that everything is done properly, everything is done correctly. And there's not this wild kind of, let's throw some money into R&D on this. So it's that kind of an idea. There are lots of different ways that you can have succession depending on who your pick is. So what's the purpose of the business? And then who's the pick? Who's the right person? And who's the right person for now? And in that example, they're not the right person to lead us for the next 10 years to get us to where we're going. But once we get there, they're absolutely the right person to lead us.

Leanne ElliottI think it's important to remember that, yes, whilst we can make some confident predictions about how people will behave based on how they are as children, equally, the leader we need in our family business is going to be entirely dependent on what stage of growth our business is in. So as a parent, can you really make a confident decision looking at your 5-year-old if they've got what it takes to run your business? Probably not.

Stephen ShorttYeah, I mean, I would, I would always advise people not to just take on the next generation because of the next generation, like to just go, oh, well, they're the fruit of my loins, so they're obviously as amazing as I am, or they have the same drive. I mean, that, that's just asking for trouble. So one of the things in the prepare section of the 5 Ps of successful succession, it's all about the internal and external development. So if somebody's joining the family business, they should really join as low as they possibly can to work their way up. And I've seen it in the past. I mean, we've all seen it. This is the stereotype that enrages me about family businesses when somebody says, oh, well, She's the marketing director because she has an Instagram account. She knows nothing about marketing. It's just she has an Instagram account. So that's the view, that's the future of the business or whatever. So they haven't earned the position. They're just there because they're family. So they haven't actually swept the floors, they haven't polished the doorknobs, they haven't done the teas and coffees or gone on the crazy flights to go meet a client somewhere else. So I would always say that you need to spend time both on internal and external development to come in as low as you possibly can and/or go somewhere else and get trained in a similar industry or a similar position. So if you want to be a marketing director for a €3 to €5 million family business, you should really go and be marketing director for another similar-sized business that is not your family and actually work your way up. and then come across at that level. If you're not coming across at the same level, you should start as low as possible and work your way up. So you can start from the age of single digits if you see something in them. I would be really against the idea of trying to groom somebody that they view that this is their only option or that they have to join the family business. But having those conversations, letting them go, come back, go to somewhere else, come back, earn their chops. If they are 16, 17 and they don't know what it's like to work somewhere else and get fired and have somebody scream at them for not doing their job, they should probably go do that, um, so they know what it's like. They're not just coming in going, you know, Mommy and Daddy, I'm going to be late, or whatever. And that can be problematic. Um, but really, the training and the coaching, it can be for any age. It can be at any age. And that training and coaching is not just for them to take over the business. Also, as a parent, you want the best for your kids. You want to actually instill as much as you can into them, whether that's taking over the family business or going somewhere else. So learning the life lessons, giving them the rope to do some stuff. Really growing up in a family business, you should be doing the same things. You should be starting at the same levels as somebody else who comes into the business. Now, you are going to have, if you're you're so inclined to take over the family business, you are going to have a different trajectory even though you start at the same time, at the same level as someone else. And you are probably going to be getting a lot more coaching, or not structured coaching, but you're going to get mentoring and coaching whether you like it or not. So you're going to be able to develop at a pace that other people maybe aren't. But while you're doing all that, going to college, working for someone else in the business and working, That can be 20 years. It can be for as long as the current generation really wants to work in the business and wants to work with the next generation. But once the decision has been made that junior is taking over, that process is now going to be in train, that we've said, right, we want out, you want to take over, that process should only be 5 years max, ideally 3. Because it's not like you're walking away. You've still got the opportunity to mentor and coach that person behind closed doors. But anything longer than that, and it starts to drag on for the team as well. Like, who am I going to? Who's making the decision? So that's where I say the 5 years is the maximum. But before that, you could be working together for 15, 20 years, slowly learning and building and sharing responsibility.

Leanne ElliottWe've covered the personalities within family businesses. We've covered some of the common pitfalls that we can fall into. We're going to round up this So, in this episode, we're going to share some practical tips from Stephen on what successful succession looks like. And while this is transferable to other types of businesses, there is a personal element that comes with family businesses, particularly in terms of balancing work and family life. So first, Stephen shares his experience of when he was ready to leave the family business, but instead decided to take action.

Stephen ShorttIf I set the scene, it was a very grey, wet, cold, Friday afternoon in Dublin, which could have been at any time of the year. It could have been the summer, could have been the winter, but it happened to be in winter. But I remember it like it was almost caricaturish how bad the weather was and how bad I felt. It was this cliché of a movie. But I came home and I remember I'd been arguing with my folks for weeks about different courses we should be running in the school. And then we had an English language school or the technology or the marketing everything else. And we were just butting heads all the time. And I remember coming home, my wife was about 8 months pregnant with our second child. My youngest daughter, my eldest daughter was playing in the kitchen. And I slumped down at the kitchen table and I said out loud for the first time, stuff that had been going on in my head. And I said out loud, I'm going to have to leave the family business because if I don't, my parents will never see their grandkids because we will not be able to be in the same room. I don't know if I'm allowed to swear on your podcast, but that was the— I had to just vent that. And the second I said it, every cell in my body viscerally reacted to, no, that's not, that's not the plan. That's not what we want to do. So once I kind of cathartic a little bit and given out, I knew really that's the last thing I wanted to do. So I can't be the first person to have a problem in a family business. I mean, family businesses have existed since the dawn of time. there has to be examples and solutions and ways of doing this. And so I set about trying to find those and put those together, put them into place. And then fast forward 12 years, I bought both businesses from my folks, sold one of them, and we've now moved. So the other office, the company, the main business that I'm running now was based in the family home. So we moved that out into town. So now we sold our house, my wife and I and my kids, we sold our house, renovated my parents', my family home, and we now all live in the same house. And that kitchen table that I slumped at, we had Christmas dinner and New Year's dinner at that table 12 years later, all living and still working together.

Al ElliottWhat a story. The fact that they— he's still living with his parents, although not working anymore, but still living with his parents. I stand and applaud at that. Anyway, so Stephen says there are 5 Ps to succession.

Leanne ElliottThe 5 Ps are purpose, pick, prepare, promote, and patience. Here's Stephen to bring this to life.

Stephen ShorttWhat's the purpose of the organ? What's the purpose of the division? What's the purpose of that marketing to— and it's clearly defined. Where are we going for the next 5 years? Who's the right person? Who's the pick that needs to bring us there? Is it a creative? Is it a process? Is it a whatever? Then the promote— sorry, the prepare. Have they done it before? Like, that prepare might be a bit shorter if you're in a corporate environment, or it could be still a good 5 years if it's your business and you're selling to or you're giving it to a protégé. But in a corporate business, have you got the qualifications? Have you got the experience? Okay, I'm gonna coach you, I'm gonna mentor you, I'm gonna teach you about these clients, I'm gonna teach you about this way of doing things. these things that we've learned. And then it's the promote. Promote has 2 meanings. One is to actually give them the job, obviously, to let them step up. But the second promote is to be their cheerleader, to actually be publicly saying, yep, no, that's next gen's decision now. Because it happens a lot in family businesses when you step back, especially if there's kind of new ways of doing things. Sometimes employees that have been with the company for a long time will go to let's say, consult with the previous generation. Oh yeah, I'm not so sure. Is this the way we should be doing it? It's not the way we did it before. Your job as the now previous generation or current generation is to be, nope, it's junior's decision. Absolutely, it's the right thing to do. You got to go talk to them. I'm not answering that. You can have all the conversations you want behind closed doors and you can disagree vehemently with what they're doing and try to counsel them, but publicly you have to be their biggest supporter. That's the second meaning of the promote. And then the 5th one is patience because at some point it's gonna hit the fan and everybody's learning. So whether you're in a corporate or whether you're in a family business or a smaller business, the 5 steps are the same.

Al ElliottOkay, so it's been another chunky episode. We have covered all kinds of things in this. A couple of things you need to know, if you want anything we've linked to or we've discussed, we will link to in the show notes. So just go to truthliesandwebsites.com. Work.com, and you'll see that the show notes will be the last up there under episodes. So you're gonna learn more about Ryan, where you can find him, where you can find his website and his podcast, The Science of Personality Podcast. I just noticed whilst I was looking at the video before, he's got a Shure SM7B, which is what I've got as a microphone. So clearly he knows what he's talking about. And if you want to learn more about Stephen, he's at successfulsuccession.com. Again, links in the show notes. To his LinkedIn, his website. He also has a podcast, unsurprisingly, called Killer Family Business Podcast. There are some great guests on there. In fact, one of his guests we've stolen for an upcoming episode.

Leanne ElliottWe have, and I particularly enjoyed— I think it was actually the first episode when he talks to his parents and gains their perspective on, on building a killer family business without killing your family, as Stephen calls it. Thank you so much to Ryan and Stephen for your incredible contributions today. We have learned so much. Lots to think about, lots to digest. Loved it.

Al ElliottLeanne, I think we've deserved a glass of wine. Shall we go and enjoy one?

Leanne ElliottWe have. Have a, have a good week, and we will, we will see you on the other side.

Ryne ShermanSee you next week.

Chapters & timestamps

Show notes

Why Personality Matters in Family Businesses: Lessons from Dinner-table Dreams to Boardroom Deals

Top 3 Takeaways

More From This Episode

Connect With Us

Full transcript