Welcome to The Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of diversified solutions across senior level executive search, leadership assessment and development, team and organizational effectiveness, and culture-shaping. Every day we speak with leaders around the world about how they're meeting rising expectations and managing through volatile times, thinking about individual leaders, teams, organizations, and society. Thank you for joining the conversation.

Peter Pfaff: Hello, I'm Peter Pfaff, a principal in Heidrick & Struggles’ Frankfurt office and a member of the Global Industrial and Financial Officer practices. Today I'm delighted to be joined by Björn Lahm, CFO of Harting Technology Group. Björn took on the position in May 2023, leading the global finance function at a 100% family-owned industrial group. Before his current role, he held senior finance positions at Thyssenkrupp, Bilfinger, and Mitsubishi Power, bringing strong global experience into a legacy business. Björn, welcome and thank you very much for taking the time to speak with us today.

Björn Lahm: Thanks for having me, Peter.

Peter Pfaff: Björn, you've had senior finance roles across global corporations and today you're CFO at Harting, a family-owned business. What motivated your move to Harting, and what felt different from day one? What aspects of the family business environment surprised you?

Björn Lahm: Maybe let me start with giving you an overview what Harting is, what Harting does. Harting was founded in 1945 in Germany. And back then we started with household products mainly, such as energy-saving lamps and electric hot plates. Then in the 1950s we specialized in industrial connectors, especially the Han series, for which we are really well-known today. Today, we're present in more than 40 countries offering innovative solutions for connectivity, digitalization, and immobility.

Over the years, the company really has grown significantly from a small family-run business into a global technology leader. Today, we are in excess of €1 billion in revenue. Over the years, we've really expanded our portfolio. We really embraced the whole digitalization movement, and we invest a lot of our focus on innovation, while really staying true to our roots, which are reliability, quality, and our forward-thinking mindset.

What motivated me to join that company? From day one, I was really impressed by the history of the company, that one family can grow such a business and then to see this tremendous growth, especially over the last years. To give an example, in 2015 the company was doing €500 million in revenues, and by 2020, doubled that to €1 billion. And all of that was done organically. And this was really impressive for me to see such growth to be managed internally, plus the family really has a clear vision, a clear strategy going forward, that by 2030 we want to double the business again and reach €2 billion. And to be part of that, that story, that was really intriguing to me and I really wanted to, and am, supporting that whole transition, and I'm really glad to be a part of the team.

Peter Pfaff: That's really impressive. And if we look at family businesses, they often think in generations rather than quarters. How does that long-term view shape your financial strategy and decision-making?

Björn Lahm: As mentioned, the company has a clear vision. So, we want to grow for our products based on our value sets with being an innovative company but also really being there for our employees and for our customers. And together with that, it’s really about making that growth, making that sustainable long-term growth, happen. We really have a long-term vision for the company. What we want to achieve is to really become one global company, one global player, and reach that €2 billion mark by 2030. And we are really fully committed in making that happen and achieving that goal, and this is also then reflected in how we steer the company. For us, it's not really about hitting every quarter's result, which we do normally, but the focus is really a long-term focus to do what is right for the long-term growth, for the sustainable growth, also over generations, for the company, for the family. And with that, this is really what we are committed to do and really, yes, put everything we do with that long-term goal in mind. That doesn't mean that we don't focus on quarterly profitability or achieving our targets, we are really committed on that as well, but we don't sacrifice any long-term decision for a quarterly result.

Peter Pfaff: How does that mindset affect the role, your role, basically, in a family-owned company compared to a public listed company in terms of expectations, influence and how success is defined?

Björn Lahm: Interesting question. One of the fundamental differences in my experience is in a family-owned company, the family is deeply involved in everything they do, be it be it production, be it financials, be it product development, be it marketing and so on. The understanding of the family of the whole business is different to that of a normal CEO who maybe runs the business but is not as deep into all these areas. And for me, that’s a key difference, and also requires a different approach from my side. So, I'm much more focused on really creating transparency and supporting my CEO more as a co-pilot in that journey. It's really my task to really get involved into the whole business and understand our products, understand why we're doing this product development, why we go into that market and be really there and make sure we have the and he has the transparency to really run the company.

Peter Pfaff: And that's a very interesting point, and I would like to build on that. In your view, what are the specific capabilities needed to succeed as a CFO in the family business, more from the personal side, that are different in comparison to a public company CFO?

Björn Lahm: Well, I think next to the normal skills that you have to have, which is technical excellence in what you do, having empathy, the communication skills, I think it's really about having the willingness to understand where the company is coming from, the tradition, and also by that gain an understanding for the culture. Because for me, it feels different in a family-owned business, the whole ambition and the passion the family puts in and has put in over decades, you can really notice. It's small things like our Christmas party; this feels more like a Christmas party at home with your family rather than a corporate. And those are little things, but they really create a bond also for the employees with the company and with the family. So, for me, it's really being able to understand that culture, appreciate the culture, but also being willing to challenge decisions taken here and there. Because for a lot of the employees that are along with the company for a long time, it's sometimes difficult for them to challenge decisions made in the past, because maybe they were taken by the family or senior executives, and back then they were good decisions. But I mean times are changing; things have changed. We have new technologies; we can employ more efficient processes. And so, you need to sometimes challenge things but also keep in mind that the way we did things in the past, the traditions we have, put us where we are and really made us successful.

Peter Pfaff: That's really interesting. And what practical steps do you take to keep your finance teams aligned when short-term pressure still exists?

Björn Lahm: I really believe in transparency, to unite the whole team under one common goal and to make sure everybody understands why we are doing something, why are we changing something, why are we running towards this process or towards that goal. And for me, there communication really is key with the normal things like standard refixes, team meetings, also one on ones. Plus, I strongly believe in really empowering the team, because I really believe in the skill set of my team and I know that together, we are stronger than one individual. And really, yeah, putting the members of the team to the best use based on their capabilities and their skill set. So, when I joined, we pretty much moved from a very decentral organization to a regional organization. And at the same time, we changed our whole planning process. And everybody who has changed the planning process in finance knows that the first run is difficult because you're still changing things as you go, plus having changed the organization and people aren't really clear about what their roles and responsibilities are going forward. It’s quite tough and mistakes happen. But if you continuously communicate what our goal is and you don't focus on the mistake and why the mistake has happened, but really align everybody towards that one goal and try to fix that and learn from it, I think that’s the key for me to really have a successful team.

Peter Pfaff: Thank you for the insights there. Harting’s values have long guided the business. How do you translate those family-driven values into modern financial leadership and culture across regions and functions, including maintaining a consistent culture and financial discipline across diverse markets?

Björn Lahm: I think our company values, performance, and partnership leading to profitable growth, they align perfect for a finance team. You need to be able to measure your performance, and also, obviously, your financial performance, and not only that but also customer satisfaction, service delivery and so on. We thrive for excellence in these areas, and in my experience it's really imperative that you are able to measure your progress. And without progress measuring it's a strategy but it's tough. Are we there? Are we not there? And it's difficult to derive measures if you're behind your target and then to really make sure you be on in the future. So, this is what we're doing in finance, but for the whole company, we have our set of KPIs that we regularly look on and if we see deviations, we define actions to be back on track.

Peter Pfaff: In the past you've led transformation initiatives in legacy businesses before. How do you bring people along when change challenges establish traditions? And what role does the CFO play as a change leader beyond numbers and systems?

Björn Lahm: So, I think in any transformation project, it starts with having a good understanding of the business, where the business is coming from and why we have the need to change. Do we need to change because it's a turnaround situation? I think it has to be very clear also in terms of what you need to communicate. Or is it a transformation because we need to improve the setup we have as a company in order to grow in the future, for instance? So you, like Harting, you have a very successful past, but you realize we need to change something, because we've grown so much and we need to go to the next level.

Peter Pfaff: And you still have so much potential left.

Björn Lahm: Exactly. And that's why we recently did that. We saw the need to change, as mentioned, from a very decentralized organization to establishing regional layers and moving some things also more even more centrally. But if you look at the past, it's been very successful. And so, where's the ultimate need to change and to bring that across? If you're loss-making for three years, every employee understands this is not sustainable, we need to do something. But if you have a very successful heritage, we need to really go, I think, a level further, a level deeper and take even more time to really explain why we are changing, and what is the benefit going forward and why do we need to go through that pain of change? Because I think for a lot of employees, it's a lot of pain. It brings uncertainty, uncertainty brings fears, and I think you will never be able to completely address that. But I think you can do your best in giving the transparency, the clarity, as early on as possible, to remove that uncertainty and support the employees along the way. For me, the key role of the CFO here is to underline that change story with numbers, with KPIs, with financial indicators. Where are we today? Where do we want to go tomorrow? Why do we need to change, and how does that change support us in doing that?

Peter Pfaff: And also, I think what you did perfectly is giving transparency with the numbers, underlining where you want to go, why and what's the benefit in the long-term view.

Björn Lahm: Yeah, and it's sometimes it's not obvious because not everybody thinks in EBITDA and cash flow, but in the end, you need to be able to put it into an extraction level that your normal employees, non-finance people, understand and really make it easy and transparent for them, yeah, to understand, so you can take them along. Yeah, but in the end for me also this, every transformation, this is more than just the communication part and designing where do we want to go; it's really seeing it through to the end and, yeah, walking the talk kind of and really being part of the execution, and making sure that everybody understands this is something that is needed for the company and fully supported by top management. And for me especially, that means putting in the time. So every other week you're meeting with the whole change team and spend the time going through initiatives to see where we are, push it, and when there are obstacles, help the team in overcoming them.

Peter Pfaff: Yes, really important point that you made here. And adding to that, you operate in a context today where the owner family plays an active and critical role. What does effective governance look like in that setup, and how do you balance proximity with professional distance?

Björn Lahm: We have a very clear governance framework, but I think every company in our size has that. So, for me, it's not about a family company versus non-family company. I think it's a lot about size of the company and what is really your structure, your rules, your responsibilities to run that company. Obviously, in a family-owned company, you're very close to your shareholder. Decisions are being taken very fast, and you're really close to the decision makers. And also, here again as the CFO, I think I play an important role to make sure that the transparency for making these decisions is always available, and I think that’s key also in our organization.

Peter Pfaff: And Björn, we’ve known each other for a long time now. For you, talent and leadership development have always been key in sustaining businesses. How do you attract and develop the next generation of finance leaders in a stable, yet evolving family business like Harting?

Björn Lahm: Well, I think key is to be an attractive employer and be an attractive company with an attractive, yeah, story. And I think our story is super attractive with the growth we've seen, with the growth we've planned, that's, I think, super exciting and it also opens up new opportunities for staff. And I think that's very important, to really show a path for your younger staff, how they can develop, in which areas they can develop, also to give them some really good perspective going forward. Yeah, and personally, I really believe in empowering the team and giving them opportunities, letting them try things, allowing them to make mistakes, because we all make mistakes, and when they make mistakes, really be there for them.

Peter Pfaff: And guiding them.

Björn Lahm: Guiding them and supporting them and also owning up to their mistakes together for me because at the end it's my responsibility, and then we fix it together and we learn from it and, yeah, we attack the problem, not the person. I think that's my clear leadership role which I've been successful at so far, and also really have good relationships with my colleagues nowadays and also prior colleagues still.

Peter Pfaff: Looking ahead, what can large publicly listed corporations learn from family-owned companies and vice versa when it comes to leadership, culture transformation or long-term value creation?

Björn Lahm: For me, that’s really focus. As we discussed before, we have this generational focus which I think gives us a really good direction. Plus, obviously, you're really close to the decision makers. You have a flat hierarchy or flatter hierarchy, you don't have a Board, Managing Board and Board of Directors, but this is all, it’s combined. So really, the speed of decision making, if there are changes in your market that require adjustments, we are really fast in doing them. And I think in the end, that’s the key to success, this long-term orientation, plus decision making. So, we don't change course every other year because we have a change in the CEO or there is a new hype in the market, and I think that helps to have a steady course. On the other hand, I've seen large corporations, I mean they're really strong in terms of processes, governance, very structured in doing things, maybe sometimes too structured, maybe a bit too bureaucratic, and I think that's why I think both companies or both types of companies can learn from each other. So, maybe public listed companies can be a bit more long-term focused, try to reduce bureaucracy, flatten the hierarchies, be faster. And I think smaller companies that have really grown can try to standardize things more, (a) for efficiency reasons and (b) just to make sure it's compliant in what you do.

Peter Pfaff: Björn, thank you very much for making the time today and speaking with us. We really appreciate your view, your experiences so far, and thank you again for sharing them.

Thanks for listening to The Heidrick & Struggles Leadership Podcast. To make sure you don't miss the next conversation, please subscribe to our channel on your preferred podcast app. And if you're listening via LinkedIn or YouTube, why not share this with your connections? Until next time.

About the interviewer

Peter Pfaff (ppfaff@heidrick.com) is a principal and member of the global Industrial and Financial Officers practices; he is based in the Frankfurt office.