In an earlier post, we discussed the challenge family business leaders face in creating a culture of accountability, one where employees understand what is expected of them and are evaluated on their performance and where performance issues are addressed. A 3rd generation member of a very successful family business shared a story with me that cements the value of an accountability based culture. She admitted that their company had run for almost 100 years without an accountability based culture. They valued loyalty and rewarded employees based on longevity rather than performance. While they knew members of the management team were not performing up to the needs of the organization and their performance was impacting the company’s success, they chose not to deal with the situation. Finally, with the downturn in the economy, she and her cousins in the management team acknowledged that the issue had to be addressed. They could not harm the long-term viability of the organization to protect a few individuals.
Their first action was to deal with a long-tenured manufacturing supervisor. The family member involved in the HR function approached the supervisor and let him know where his performance was not meeting expectations and set clear guidelines for performance improvements that needed to occur for him to keep his job. She fully expected that he would opt to take early retirement and had a package ready that the owners deemed more than fair.
To her surprise, instead of deciding to leave, the supervisor rose to the challenge. He not only met their expectations but actually exceeded them. His attitude and ability to change was a motivator to the ownership group and across the organization. The 3rd generation owner reports that 2 years later, the entire organization has become energized by the change to an accountability culture. Some management team members have chosen to leave, but those who have remained are performing well. And, the turnover has created spaces for new employees who are a better fit with the changed culture.
Her advice to other family businesses that need to confront a change in culture – go ahead and take the plunge. If it’s the right answer for the organization, you will find that the pain will be worth the gain. As owners and leaders of a family business, employees are looking to you for direction. If you send the message that under-performance is expected, they will deliver. But, if you send the message that this is an organization that strives as a team to achieve success, they will be excited to follow you down that path.