A recent Wall Street Journal article (At Family Firms, Do CEO’s Work Fewer Hours? by Rachel Feintzeig, Wall Street Journal Online, March 5th, 2014) referenced new research by professors at Harvard, London School of Economics and Columbia that measured family firm CEO’s as working approximately 8% fewer hours than their non family counterparts. Is this an indication of impending underperformance?
Vibrant family businesses are often run by CEO’s who have mastered the art of working on the business rather than in the business. They may work intensely during much of the year but also find ways to create time for thoughtful reflection on their businesses and are constantly discovering ways to improve not just today’s bottom line, but future opportunities as well. Their insights are as likely to emerge at 5:30 a.m or 9:00 p.m., and not just during office hours.
Signs of a vibrant family business include:
Clear and aligned strategic direction from the ownership group, to the board to the CEO and management team;
A culture of high performance in which problems do not fester unattended;
An engaged workforce in which each individual understands how he or she contributes to the company’s objectives, and has the resources necessary to meet assigned goals;
Mutual trust between ownership, the board, the CEO and the management team;
A dynamic and iterative succession/continuity planning process in which the CEO and the family ownership group are actively engaged in achieving generational transition (assuming they have agreed on doing so); and,
A constant drive to meet or exceed ownership’s clearly stated objectives (which may include both financial or non financial measures).
Signs of a family business whose future may be troubled include:
Owners, directors or executives who are not sure where the company is headed;
Acceptance of correctable company problems and weaknesses as just the way things are;
Managers or employees who do not have clarity on their work priorities or goals;
Distrust between the ownership group, board and/or CEO;
The inability to discuss or make progress on succession and continuity challenges;
Little effort to clarify what ownership’s objectives are or limited drive to achieve those goals.
CEO’s spending their time driving towards becoming or remaining a vibrant family enterprise position their businesses for future success while CEO’s who lack that drive will generally allow trouble spots to creep into the picture. Regarding time spent at work, perhaps the best question to determine whether there is trouble in the corner office is, “What are you doing with your time?”
Newsweek (12/20/10) cites a recent Harvard study of 4000 firms that finds “companies in which families hold control ‘outperformed their counterparts by 6 percent in market returns and 10 percent in profits.” Says Newsweek: “The study refutes the long-held notion that family firms are plagued by infighting, failure to innovate and a tendency to mix personal and professional bank accounts.” This certainly isn’t news to readers of The Family Business Advisor, but its nice to see that Newsweek (until recently owned by the Graham-family-controlled Washington Post Company) has finally gotten the news.
If the holidays weren’t enough to stir up trouble for family businesses here in the US, for the past couple weeks we have been in the midst of college football rivalries to add some fun conflict to the family business. Yes, I did say fun conflict, and yes, there is such a thing, and sports can deliver the goods. All over the country stretching from Southern California with the cross-town rivalries of USC and UCLA, to the South with Alabama and Auburn, to the Northeast with Harvard and Yale and culminating this weekend with Army vs. Navy in Philadelphia, it is rivalry season where brother roots against brother and family alliances and differences are celebrated!
Last Saturday here in Oregon the 114th Civil War game pitting the University of Oregon Ducks vs. The Oregon State University Beavers was played in Corvallis. The “number 1” Oregon Ducks went on to defeat the Beavers by a score of 37 − 20. Now the Ducks will play in the BCS championship game against Auburn on January 10th 2011 for the often-disputed title of college football champions. While the BCS debate is a whole other discussion for blogs and sports radio elsewhere, for family businesses, sports rivalries can be a nice distraction and an enjoyable way to deal with some healthy conflict. Here in Oregon, it was fun to watch families divided in their loyalties as a husband wore green and yellow (colors of the Ducks) and his wife wore black and orange (Beavers) and their sons and daughters divided in Oregon and Oregon State colors. Throughout the stadium the pattern repeated itself as families were divided in their allegiances, and some even went so far as to display the ultimate hybrid — the platypus — melding the Duck and Beaver fan who has ties to both schools.
Many family businesses in the weeks leading up to the Civil War used the event with their employees as a way to bring hilarity to the work place as various bets and challenges were issued based on their respective allegiances to either the Ducks or the Beavers. I can tell you on Monday morning there were plenty of Beaver family business owners driving to work wearing Duck gear, or having their car adorned with Duck colors or even worse dressed as the Duck mascot. For many around the state of Oregon yesterday was a very long day of humiliation and insults, but there is always next year – and it was all in good fun.
Regardless of the sport it is interesting to see how in some families the long tradition of supporting one team continues while in others the next generation breaks the tradition and roots for the biggest rival – just to shake things up a bit. Certainly many families use game day outings as a way to bond and socialize together for fun. With a few of my clients we have used their strong connections with a certain sports team as a motivator to not violate the ‘Code of Conduct’ or they will be required to make a contribution to their rivals’ athletic fund. We have had a great deal of fun with it, and I can tell you the shame of writing that check is a powerful motivator! A good question to ponder is: ‘How does your family use sports and rivalries as way to build bonds and connections with family and employees?’