The concept of stewardship in family business has its roots in the long-term view that family businesses take. Building strength for the next generation not just the next quarter is the strategic advantage of family business. Because family companies have different expectations than public companies regarding long-term planning they have the opportunity to create a culture of stewardship that pervades the organization.
This culture should begin with the family’s commitment to building value for future generations and be described in a family values statement. These values then become the foundation for company values, vision, and mission that can guide management decisions and actions. But these statements must not be just “window dressing”. The guiding principles of the family should be translated to guiding principles of the business that can be lived every day.
Just having family members leading the business and working in the business will not be sufficient to accomplish the kind of culture discussed here. It is too easy for even family members to compartmentalize family and business and in so doing fail to let family values consciously guide their actions. If family and non-family executives are going to manage as stewards rather than agents they need the support of ownership. Active owners who take the time to understand the goals, opportunities, and strengths of their business can give management the conviction to stand firm when peers in other companies are looking out only for their individual interests.
One of my clients, a fifth generation building products supplier, was hit very hard by the economic contraction of 2008. While it was necessary to cut costs in the business, the owners did not expect the employees to bear that burden alone. They worked with management to cut the distributions to owners significantly in order to preserve the strength of their business to take advantage of an upturn in the market that would surely come. This was a lesson they had learned from previous generations and their commitment to preserving value for future generations gave business leaders support and confidence in doing what was needed to respond to the challenges of the market.