All posts by Kent B. Rhodes, Ed.D.

HEB Founder Culture 107 Years On

Kent Rhodes

On November 26, 1905, Mrs. Florence Butt took out a $60 bank loan to open the first H-E-B store in Kerrville, Texas. The store was run on the ground floor of the Butt’s house and was named C.C. Butt in honor of Florence’s husband, Charles.

Now being run by a third generation H-E-B has grown from a single local grocery store into a chain of nearly 400 stores generating annual sales in excess of $18 billion, currently operating in two countries. This company is another prime example of how a founder’s values, translates into a culture that informs every aspect of the successful family enterprise.

In the early 1900’s, groceries were traditionally delivered to a customer’s home and for Florence’s three sons, this meant delivering groceries to those customers using the boys’ outgrown baby carriage until the family was able to save up enough money to purchase a little red wagon to serve the purpose. Florence created an environment that supported, and in fact relied on, family participation, which has translated into a culture that views participation as a family privilege that is extended to employees today.

As the first store became a hit in the community, the family hired their first non-family employee, G. Leland Richeson, to assist with the growing demand and in 1919, 22 year old Howard Butts returned from serving in World War I and took over running the day to day operations of his mother’s store.

From the beginning, Howard was keen on upholding his mother’s notions of customer service, treating employees as extended family members and giving back to the community, even as the company continued to grow. He was invested in the success of the family’s business and was highly motivated to grow it. By the early 1920s, stores were added in the towns of Junction and Del Rio, Texas. Howard also expanded the selection of products offered, tailoring the inventory to consumer preferences.

One of the strongest cultural artifacts of this famous Texas family enterprise is a commitment to charitable giving, both corporately and through employee involvement. The H-E-B Excellence in Education Awards celebrates public school professionals whose leadership and dedication inspire a love of learning in students of all backgrounds and abilities. In addition, H-E-B donates 5% of its pretax profits to charity.

While Florence could not have imagined the eventual impact her approach to running her business would have, it is her direct influence that still drives the company and its fierce employee and customer loyalty today.


A Founder’s Profound Influence on Business Culture

Kent Rhodes

Ikea is a Swedish family owned and operated enterprise in the home furnishings retail space.  Broadly known as the world leader for designing, manufacturing and selling modernly designed and cheap functional furniture, first generation founder, Ingvar Kamprad originally started out as a “one-man mail” company in 1943. Today the firm counts approximately 70,000 co-workers and realizes over $33 Billion turnover through 332 stores and 30 franchises spread in 38 countries.

Ingvar Kamprad’s personality had a major influence in shaping the company’s organizational culture, which was informed by his core values of cost-consciousness, simplicity and efficiency. They have also tangibly translated into Ikea’s recipe for success: Selling good quality practical furniture’s at cheap prices. The multinational founder nourished the company’s commitment to cost saving long before he first introduced the ‘self-assembling’ Ikea-way.

Anders Dahlvis, Ikea’s former CEO from 1999 to 2009, describes the firm’s culture as informal, cost-consciousness, and with a “down-to-earth approach”.  It has been famously reported that when IKEA management organized a gathering buffet-dinner for employees several years ago, Ingvar served himself last and made sure to shake hand with every worker before they left. Through this genuine and authentic action, the culture of IKEA was further solidified simply because this humble interaction with employees demonstrated the culture at work in the bones of the organization.

We’ve been blogging a lot recently about culture and the unique role is plays in the family enterprise – whether the size of an Ikea or the local hardware store down the street. IKEA’s story is likely not too different from those of other business owning families or even of your own. What stories come to mind of founder’s deeply influencing culture?


Sibling and Cousin Teams Making Decisions

Kent Rhodes

Sibling and cousin leadership teams present unique challenges to enterprise owning families. Questions about everything from strategy to new hires are sometimes complicated by the mix of sibling/cousin owners who also serve as a part of the management team.  How those decisions are made and who has the final say about them can become a sticky issue

While collaborative leadership may be a desirable goal to many families, decision making by consensus is rarely easy and never efficient. The result can be that decisions are made unilaterally, which while saving time, may fail to take into account important strategic or even tactical views from other family leaders/owners working in the business. Quite unintentionally this approach can lead to lower quality decisions over the long haul and create tensions among owners.

So, what is a leadership team supposed to do when at first glance, the choices seem to be to make decisions efficiently but with the possible impact on the quality of relationships with fellow owners/managers (who are also brothers, sisters, and/or cousins) or drag discussions along wasting valuable time, energy and resource? Here’s a suggestion to consider: As a team, agree what kind of decisions require the teams’ input, individual teammate’s perspectives or are tactical, operational decisions that don’t require any further communication. This helps identify decisions that demand a higher quality outcome through broader input from the family leadership/ownership team. Stick to this practice, checking in with each other at an on-going owner or management meetings to make sure the highest quality decisions are being made for the benefit of both the enterprise and the family, rather than at the expense of one for the other.


Managing Communication

Kent Rhodes

Sibling and cousin teams in family businesses can provide deep perspective for both the family and the business as well as broader opportunity for family involvement in the enterprise. But it also presents unique challenges to managing communication and decision making that requires greater awareness of not only how each member of the team is “showing up” in meetings, but of the patterns or habits of how the team interacts with each other.

Even though it isn’t spelled out in very many textbooks or articles, developing the skill to simultaneously attend to the task at hand and pay attention to those habits – many of which have likely been solidly in place since team members were children together – is really important to sibling/cousin team success.

Here are some important questions individual teammates might practice asking about themselves and the team in the context of meetings:

  1. How are questions routinely dealt with? Depending on the interaction habits they have developed with each other over a life time, some team members may be routinely ignored or certain questions be considered to be irrelevant or “off limits” and therefore go unaddressed. Creating a mindset that – at least in the context of team meetings – questions are encouraged, listened to and drawn out with good questions from the team to deepen understanding will help over communication habits improve. Learning to follow up those questions with thoughtful, professional responses builds meeting competence and strengthens trust among the team.
  2. How much interrupting/talking over/ignoring takes place? I’m sometimes amazed at the sheer volume of “talking over” each other that occurs within family teams – behaviors that those same family members would never display in another social or professional context. Making agreements that support the idea that team behavior in meetings match other professional contexts is a good starting place.
  3. When did you notice yourself “making stuff up” about the process or what a speaker was saying? People routinely make sense of the world by “filling in the blanks” regarding what a speaker may not be saying or about the speaker themselves. This creates at least two challenges: One is that it is difficult to truly be an engaged and active listener if my mind is busy creating an subtext about what is being said. Another is that the content of the made up subtext is very possibly inaccurate,  misguided or both, leaving a trail of misunderstanding and misinformation that can have negative impacts on effective decision making. Learning to notice when the subtext is being created, then focusing on listening well – followed by asking clarifying questions to iron out any missing pieces – will help keep things on track.

Long Term Culture is Key to a Winning Business Strategy

Kent Rhodes

We’ve been talking a lot lately about the important role culture plays in organizations and how that is particularly visible within family businesses. That’s because family firms have been really clear about their values from the beginning – even if those values were never captured and put on a poster for the office. It is these values that form culture. The founder’s approach to doing business, interacting with customers, employees and the community all work together to help define a business culture, which can have significant impacts on how successful the family firm is over time.

So, while the culture of most organizations is deeply informed by the values of the founder, in a family business those values are more likely to continue long into the future and be deeply shared across the organization. The reason is simple: The founder of a non-family business will be eventually replaced as President or CEO by someone who has his or her own set of values and even though supportive of the culture, rarely has a vested interest in the company culture beyond understanding the role it plays.

But in the family firm, there is strong continuity of culture and values long after the founder is gone with the presence of family members as owners, managers or board members. The family “legacy” of a strong and positive culture can naturally perpetuate the original culture established by the founder for generations to come.

This kind of deeply held, long term culture is key to a winning business strategy by doing business in a way that is consistently in line with the values of the founder. From this point of view, continuity planning takes on a whole new level of meaning: It is so much more than making sure there are family members in future leadership roles. It also ensures that the winning culture of the family business can easily and seamlessly move with subsequent generations to perpetuate success.


How Do You Describe Your Family Business’s Culture?

Kent Rhodes

Anthropologists have long known that the task of learning about a specific group’s culture–or the unique way they interact with each other and complete tasks–starts by asking individual members about what they value, their key relationships, and their history.

It is important to pay attention to the unique family business culture of a firm because culture is about identifying bedrock components of the business that are the functional equivalent of the core “bones” of a building (the foundation, beams, pilings, etc). And cultural traits in a family business tend to be simpler, outward manifestations of the more complex underpinnings that hold a family business together. These traits help define what it does and, more importantly, how it does it.

 Identifying cultural traits in an organization is difficult if done from within the culture itself. For example, it’s been proven over and over again that the average American struggles to accurately identify much about “American culture”, beyond being independently minded. A careful observer from another country can easily describe some unique US traits: Highly patriotic, expectations around optimism, mobility, etc. In fact, not only is this struggle true of inhabitants of any national culture, it is also true for people living and working within organizations as well, including the family firm.

Being able to describe these core parts of a family business culture is important as the firm grows and moves into subsequent generations because it helps us understand who we are, how we like to do things and what makes us successful as a business and as a family. It also helps us identify where we might be bumping up against conflict that challenges that success and this is where the real value lies in understanding your organization’s culture.


Family Business Conflict can have Long & Complex Roots

Kent Rhodes

In the context of the family enterprise, every conflict is further complicated because of the multiple roles and relationships of family members with each other. The CEO of a family enterprise may be the son of its founder. He may also be Dad to several children and Granddad to multiple grandchildren, some of whom also likely work in the company or serve in some kind of leadership capacity. He is likely the husband of a spouse who helped him build the business and raise those several children. He may also be a brother to a Vice President in the company or even a co-president with him or her. As if that were not enough, he is uncle to his siblings’ children and in some cases may also be their boss if they work in any aspect of the family enterprise.                      

All this inter-connectedness means conflicts in family businesses tend to not only be complex but also the result of long-term processes and relationships rather than one-time events. Although unaddressed events within a family can eventually cause an underlying way of relating between family members that then becomes an accepted norm in which family members view conflict with each other as “normal” for their family.

While most families have varying degrees of this otherwise harmless dynamic as core to their relationships with each other, the added weight of interacting within the context of the enterprise or business, can exacerbate conflict and even devolve into a destructive pattern of conflict over time that is not harmless.

When business conflict is properly addressed owners or managers tackle smaller challenges, managing them effectively in real time. But when events are not well managed or are accepted as normal or just ignored, they can become chronic, stack up over time, and become crisis points. In families with long or multigenerational histories together and with strong emotional ties, recognizing and managing conflict is more challenging than for non-family collaborators. Taking the time to think about those types of conflicts is worth the effort to do so in order to enhance family unity and business efficiency.


Key Questions for Conflict Resolution in a Family Business

Kent Rhodes

To effectively address the interpersonal conflicts in family business, it is important to understand and address the unique challenges that occur when families simultaneously work to build a multi-generational enterprise, work to give back to their communities, and share financial assets that benefit both the family and its individual members.

Traditional approaches of conflict resolution have their roots primarily in the legal and family counseling fields and as such, tend to present overly simplistic ways to “resolve” conflicts that are common to families in business together. In order to figure out a realistic approach to these unique challenges, it can be helpful to first consider: 

  • Which conflicts need to be managed rather than “resolved”?
  • Can we clearly define the conflict in a way that everyone’s perspective is included?
  • Are we willing to explore every option to address a conflict?
  • Can we think about long term “fixes” versus quick ones?
  • How might we maximize opportunities for learning and increased relationships that addressing conflict can offer a family? 

These questions require you to widen your frame and set yourself up to find lasting and comprehensive solutions.


Family Business Conflict

Kent Rhodes

According to some experts, conflict is “a process that begins when an individual or group perceives differences and opposition between itself and another individual or group about interests and resources, beliefs, values or practices that matter to them”[1].  While that definition is accurate, it isn’t quite enough to accurately describe conflicts that are common to family business. 

Today, many enterprising families also collaborate in managing family offices, overseeing philanthropic endeavors through established family foundations, or sharing control of other public/ private enterprises. While all collaborations will run into their share of disagreements, the unique qualities of family at the intersection of these enterprises bring special challenges to effectively managing conflict. The dynamics that can produce conflict within a family simultaneously intersect with the challenges of owning and operating a business, introducing emotional and historical dynamics that complicate solutions and opportunities. 

It is important to bear in mind that when managed correctly, some conflicts can be beneficial – for example spurring important new ideas, innovations and energy for the business. While knowing how to manage conflict and leverage it into an advantage may not be immediately clear, and the emotional load of conflict in a family business can feel threatening – it is important not to avoid conflict, but to work to address it effectively for the benefit of the family and the business.


[1] De Dreu, Harinck, & Van Vianen, (1999). Conflict and performance in groups and organizations. In Cooper & Robertson (Eds.), International Review of Industrial and Organizational Psychology (Vol 14, pp. 369-414). Chichester, UK: Wiley.


Assumptions Need to be Questioned

Kent Rhodes

Most people instinctively know the importance of checking assumptions around beliefs and actions, yet assumptions are rarely questioned in the course of everyday conversations and this is no less true within families who also run a successful business.  By increasing communication between family members, business owning families can potentially also increase family unity and business efficiency by recognizing beliefs they each hold about other people, checking those assumptions made, and verifying the data on which those assumptions and beliefs are developed.