Family businesses turn to external chief executives: Deloitte

While family members will largely remain at the helm of family businesses post-succession, a Deloitte Private report anticipates a meaningful shift globally, with more businesses preferring outside professionals to step into the chief executive roles.

Family business succession planning and the next generation 2026 noted a shift towards appointing external professionals to the chief executive role after succession with global share projected to double from 13% currently to 26% post-succession.

"This trend is apparent in many regions and reflects concerns about next-generation readiness within the family, their interest in joining the family business, and the escalating complexity of family business operations worldwide," the report read.

"This jump in outside succession is broad, as each region is expected to see a comparable rise, ranging from 9 percentage points in North America to 18 percentage points in South America."

The report attributed the increase in the succession of non-family chief executives to a variety of factors including fewer members of the next generation willing or sufficiently prepared to take over and increasing complexity of the modern family business.

"Some family leaders may also view outside professional leadership as a form of risk mitigation, the idea being that a 'neutral' outsider in the leadership role may reduce challenges that could otherwise cause reputational and/or other harm," the report read.

The report also noted while the large majority of businesses having some form of succession plan, only roughly half have a thorough, well-developed plan in place.

Businesses surveyed said the top succession challenges include the next generation being insufficiently qualified or lacking experience, difficulty in identifying a suitable successor and current leadership being reluctant to relinquish control.

Richard Crookes Constructions managing director Jamie Crookes said a key priority for the firm is to not create a sense of obligation and family members should join the business because they are genuinely interested, not because of any perceived pressures.

Richard Crookes Constructions is a family-owned Australian construction management firm with US$1.5 billion in revenue.

"We are working on clearer guidelines for progression, so that any family member who joins knows advancement is based on merit, supported by oversight from our independent directors," Crookes said.

"The board now includes two external members who bring an outside perspective on governance and risk, which is invaluable as we focus on succession and long-term sustainability."

Crookes added having structured conversations even when they are uncomfortable has made a real difference.

"External guidance and independent voices have helped us tackle difficult topics head-on, rather than sweeping them aside. This process has strengthened both our family ties and the business itself," he said.