Tag Archives: Values

The importance of Values and Mission in a family business

Norbert Schwarz
Norbert Schwarz

One of the most enlightening discussions I was privileged to facilitate with a client was one involving the family’s Mission as it related to the business. The question posed was  “why do we own this business?” The question was rephrased as “to what end?” The discussion that followed was most enlightening.

An investor owner focused on the business as a financial wealth creator for the family. Another owner looked at the Mission of the business as being a vehicle for family bonding around a business venture that would require the family to communicate, collaborate and compromise. Some in the younger generation focused their attention on the capacity of the business to contribute to the community and for the shareholders to become more involved in the philanthropic opportunities offered by a growing and profitable family business venture.

In spite of the diverse Missions or business purposes by this family of shareholders, they were able to communicate, collaborate and compromise to establish a unified Mission and Vision statement that provided their professional board with guidelines that would allow the board to direct management effectively in the years to come. The foundation for this very rewarding process was laid by the parents and grandparents who practiced and communicate a set of values that allowed the family to bring generations together toward a common goal.

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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.

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Family Business Vision

Jennifer Pendergast

If you and your family hope to create a lasting family legacy by passing your enterprise down through the generations, a family vision statement will help guide you in the achieving this goal. 

What is a family vision statement?  Most people are familiar with a business vision statement.  It lays out management’s aspirations for what the business will become – what customers it will serve, products and services it will offer, markets it will operate it in, and at a higher level, what value it hopes to create.  A family vision statement is similar, but its focus is the family, not the business enterprise. 

The family vision statement answers these questions:

  • What do we hope to achieve as a family together?
  • What is the purpose of our wealth and what will we use it to accomplish?
  • Are there particular needs or expectations we have of the business?
  • What values do we expect to see reflected in the business culture?
  • Is our philosophy to put the needs of the business before the family, the family before the business, or balance the two?
  • What role do we, as family members, intend to play in the management and ownership of our enterprise?
  • Do we hope to stay together as a business owning family for generations to come?
  • What will our family’s legacy be – to our employees, our community, future generations of family members

The answers to these questions will shape both your family and your enterprise in the years to come. Many long-lasting family businesses come to see that the greatest advantage of being a business owning family is not the financial benefit but the opportunity to leave a lasting legacy.  Without thought and guidance, your family will under-utilize this wonderful opportunity.

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Seven Timeless Principles for Effective Leaders

Craig Aronoff

Part biography, part “how to” management book, and part philosophical tract, Joel Manby’s excellent new book, Love Works, is inspiring, readable and useful.  Subtitled “Seven Timeless Principles for Effective Leaders,” Manby uses his experience as CEO of Herschend Family Entertainment, Inc. (think Silver Dollar City in Branson, MO, Dollywood in Pigeon Forge, TN and other attractions from Georgia to New York to California) to explain a practical and effective method of  management approach based on “leading with love.”

Herschend Family Entertainment is a family business in its third generation.  Manby constantly credits Jack and Peter Herschend, brothers who led the company for over 40 years, for teaching by eample “how to lead with love.”  Manby’s thinking behind the book involves how he is seeking to build the Herschends’ family values and their example into the DNA of the company’s culture.

As one who works with hundreds of family businesses, I see Love Works, in addition to its many other merits, as a terrific primer on the importance and power of fully integrating an owning family’s values in their enterprise.  We often say that the strength of a company’s culture, built on its owning family’s values, is among the most powerful competitive advantages that a family firm can achieve.  There are few examples of how this can be accomplished on a practical basis.  Manby provides just that with Love Works, and I thank him (and the Herschends) for it and recommend the book to every family business for what it teaches.

Love Works

 

 

Love Works is available on Amazon.com. 

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What is a Family Brand Manager?

 By Albert Jan Thomassen

Albert Jan Thomassen

In today’s world companies are much more vulnerable to opinions and statements from a wide range of sources. These can harm their reputation and credibility very fast. Take the example of McDonalds a few months ago. They claimed on Twitter that their food is healthy. Within a few hours there were a lot of negative reactions. The company withdrew their Twitter campaign immediately because the credibility of the McDonalds brand was at stake.

This is but one illustration that building and nurturing a brand has become a necessity for companies.  However, when the company name is the same as the family name – brand management has an extra dimension: the family.

 Some business owning families are well aware of that extra dimension and have what I call a ‘Family Brand Manager’.  The Family Brand Manager is not about branding the companies’ products or services. It is about branding the family’s role and the value the family brings to the company and its stakeholders.  Usually a family member takes on the role of family brand manager although he or she may not always be aware of this role.

 Some of the tasks of an effective family brand manager are to:

  • Identify and cultivate the unique values and personality of the family
  • Determine how to execute their role as visible and positive owner and to make that tangible for both family members as well as other company stakeholders
  • Make explicit what their long term aspiration is, e.g. ‘no intention to sell’ or ‘if we enter a market we intend to stay’
  • Uncover and communicate the family and business stories that really matter to the success of the company
  • Provide guidance to the board and the management with a clear owners’ vision

To think about the family as a brand and make the effort to uncover that brand can be a real challenging job but very rewarding for family and company.  Done well it really helps to maximize the advantages of family ownership.

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What is A Healthy Family?

by David Lansky, Ph.D.

I was asked the other day what I thought were the qualities of a healthy family….

Happy families are all alike; every unhappy family is unhappy in its own way.

–         Leo Tolstoy.

“I shall not today attempt further to define [obscenity]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it….”

–         US Supreme Court Justice Potter Stewart

Defining a healthy family is a little like Justice Stewart’s definition of obscenity: Hard to define, but you know one when you see one.

–         David Lansky

That being said, there are a few consistent qualities that seem to characterize what we call healthy families:

  • LOVE: Love, appreciation and positive regard are expressed by family members toward each other.
  • EFFECTIVE COMMUNICATION: Family communication is clear, open and frequent.
  • ENCOURAGEMENT: Mutual support, recognition, and respect are given by family to family.
  • COMMITMENT: One observes a sense of family identity and unity,  and sacrifices are made to preserve family well being.
  • FLEXIBILITY: The family demonstrates an ability to adapt to change, as change inevitably occurs.
  • SOCIAL CONNECTEDNESS:  The family values friends, extended family, neighbors and community.
  • CLEAR ROLE DEFINITION: There is a role for everyone and everyone has a role in achieving the common good.
  • AFFINITY: They like being together.

And from my colleague Craig Aronoff, with whom I discussed these points, one last quality…

  • COMMON GOOD: a shared sense of common good, common goals and collective well being.

If I had to sum it up in one sentence, I would say:

A healthy family promotes the well being of each individual family member by creating a sense of loving belongingness, by enabling access to resources both within and without the family, by adapting to changing circumstances, and by encouraging open and honest communication amongst its members.

 

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THE ROLE OF FAMILY VALUES IN UNITING FAMILY AND BUSINESS

Bernie Kliska

According to John Ward, Professor of Family Enterprises at Northwestern University”The best tool in the family business kit is, without a doubt, its values, which shape the culture of the family and their business”. What distinguishes one family business from another are size, location, success in it’s niche, service and products. But there is a secret ingredient that acts as the glue to keep a company’s survival and the ability to pass the business proudly from generation to generation. The values and beliefs  of the family are clearly articulated to employees, suppliers and customers.

The family and business values can be a powerful marketing tool. SCJohnson Company, a five billion dollar family company always ends it’s media message with, “We are a Family Company”. Fisk Johnson, SCJohnson president stated:

“We call our values family values. They are not radically different from the values you  hear from major Fortune 500 companies, but I think we are better able to practice those values as family-owned company. People care about making quality products, really care about the family, each other and the success of the company, I believe our family caring values translate into the success of the company”.

Values play a special role in uniting family and business. When the goals of the family and the business diverge, as they invariably do at some point, shared values can LEND a sense of mission and purpose that transcends those conflicts. When values in the business and family reinforce each other, powerful synergies can arise that strengthen peoples’ performance in both realms. An excellent resource for this subject is a book by Craig Aronoff and John Ward, Values: How to Assure a Legacy of Continuity and Success.  

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Warren Buffet’s Successor: A Soybean Farmer!

Kelly LeCouvie
Kelly LeCouvie

Howard Buffet is Warren Buffet’s 56 year old son, and works as a corn and soybean farmer in Nebraska. Warren Buffet has recommended to the board that Howard succeed him as Chair after his retirement.

You might question this choice. Berkshire is a large enterprise that requires rigorous oversight of its operations, and a Chair who will ensure that strong governance is perpetuated after Warren Buffet retires. We might envision an industry expert, or at least someone who has work experience in multi-business enterprises.

Yet Howard Buffet’s background doesn’t fit that profile. He understands agriculture, and through the Howard G. Buffett Foundation works to improve the standard of living and quality of life in developing nations, particularly Africa. In addition to teaching farmers how to grow successful crops, he encourages them to learn accounting. Howard Buffett would not be considered an industry expert. But Warren Buffett is more concerned with engaging a Chair at Berkshire who understands the importance of perpetuating the values and culture that have helped create Berkshire’s competitive advantages. And he has pointed out the importance of this in family-owned businesses: “Family-owned businesses share our long-term orientation, belief in hard work and a no-nonsense approach and respect for a strong corporate culture,” said Buffet during a talk in Switzerland.

Howard Buffett may not seem like an obvious pick, yet based on what we know about continuity through generations in family businesses, he might just be the very best strategic choice for leadership at Berkshire Hathaway!

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Family Business Values Reaffirmed at McKinsey

by John L. Ward

McKinsey, the acclaimed consultancy, has been much in the news recently, because of an insider trading scandal.  (See a terrific article in The Financial Times, November 26.)

Reflecting on the great history of success and current travails they have drawn some conclusions:

  • Don’t maximize growth – controlled growth is more sound.
  • Think long-term –

–         “[think] as much about the judgment of ex-directors in 20 to 30 years hence as that of current partners.”

–        Protect the downside – “I’m more worried about being criticized for having gambled big, then for having missed an opportunity.”  (Said the current MD.)

One hears these principles commonly among family businesses.

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Special Culture Stories

by John L. Ward 

  • The oldest working employee just retired – at 102!  He worked for three generations of the Annixter family in Chicago. More than 50 years.  His presence and contributions were acclaimed.
  • A mid-sized family company in Thailand had to lay off 100 employees.  For each they provided some “micro finance” to help them consider a self-employed alternative.
  • A U.S. family company has a college scholarship fund for the children of employees.
  • Another set up an emergency loan fund for employees who face a crisis – major family health complications, house flooded out, etc.

Family firms are often very special places to work.

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