Being a parent is the hardest and most rewarding job I have ever held. As any parent knows – there are no ‘owners manuals’ out there to guide you on the many decisions large and small you will be faced with as you raise your children. You are essentially equipped with the values you were taught and your own ‘best judgment’ in the heat of any particular moment. At a minimum, well-intentioned parents seek to love their children, feed, house and educate them, and protect them from harm. While this list is benign enough – the truth is that last one can be tricky to navigate. At what point is our role as protector essential (keeping our kids out of physical harm), and at what point is our desire to keep them from harm in the near term sometimes counter-productive in the long term?
While there are certainly times when a parent needs to ‘go to bat’ for their child the powerful instinct to protect our young can get in the way of their healthy development at times. Think of the parent who is still closely monitoring the homework routine of their 10th grader. If that child never learns how to organize work independently nor take the consequences for a failure to ‘get it done’ – they are going to be in for a rude awakening in the real world where folks have to be accountable and responsible on their own. These are often also the parents who ‘fix things’ for their kids, if the child gets into trouble the parent tends to swoop in and make the problem go away.
This pattern can really be a problem in a family business context. For one ting, it can be perpetuated longer if a parent seeks to protect their child from poor feedback, real responsibility or accountability even into their adult roles at the business. The results are almost always poor for the adult child (the interference of a parent on behalf of an adult child rarely makes that child look competent or reliable), can have negative consequences in the business (e.g., if non-family employees get frustrated that this family member is never held accountable and they are left cleaning up the mess), and can create strife in the family or result in a family pulling itself into stronger ‘branch’ thinking if siblings start to intercede on behalf of their kids in ways that are inappropriate.
While it is important to remember that we are family and that shared love and support should guide thinking and decision making – if a parent never allows their child to ‘face the music’ of accountability, they will fail to learn some critical life lessons. Failure and set backs, while never fun, are essential life lessons that build resilience, competence and real confidence, as the person has to dust themselves off and try again. While it can be hard to push our babies out of the nest and watch them fall to the ground – they will never learn to fly on their own, and really blossom into their full potential, if as parents we don’t allow them to experience the set-backs and failures that are a part of life.
While speaking about contentious politics is fraught with risks, it seems that family businesses can learn a thing or two from the experience of the past month’s debt ceiling debate, so I am daring to enter into that fray in the name of education on good process.
Demonizing your opponents creates “Us” versus “Them” at the expense of “We.” Sound bites degrading members on the opposite side of the aisle increase tensions and take focus off of true problem solving. Even after a problem is solved or decision made, the other side is seen as a little less human and worthy of less consideration. While this is old hat in politics, it is incredibly destructive in the realm of family enterprise. When we degrade others behind their backs and dehumanize them because they disagree with our positions, we directly contribute to mounting distrust in each other and make our systems of decision making more fragile and toxic, increasing the likelihood that our next decision may be ineffective, or worse.
Seeking commonalities on values and vision comes before financial decisions. Left mostly undiscussed in the debates (or at least in most media outlets) were the core questions of who we seek to be as a people and what it is that we value in common? Family ownership groups that take on financial decisions before agreeing what direction the family seeks to drive the enterprise, or the values to be lived out in the enterprises they own, often find conflict in rich supply, if there are divergent ideas about direction and values. Forcing decisions before coming to agreement on these foundational elements creates surface conflict that ignores the more deeply rooted beliefs that are really driving the dialogue, even if unspoken. Spending time getting aligned on vision and values creates a context to make later tough economic decisions. Ignoring them leads to polarization and reduces decision making quality.
Agree on the rules before entering into contentious discussions. There were moments in the debt ceiling debate where arguments emerged about who had the authority to do what, and by when. While much of this was political positioning, these uncertainties created distrust among many who questioned that the system could function on behalf of the citizenry. And, other than those who prefer chaos, a general pall was felt by many. Family business owners need to know how they will make decisions before being faced by tough, meaty challenges. Who gets a voice? How will dissent be communicated and dealt with? Can a few stop a decision, or does majority rule….or a super majority? Answers to these questions provide a path forward, even in very challenging times. Chaos chokes the decision making process and can result in stagnation or paralysis.
Elections matter. While the political debates were at times chaotic and incoherent, they absolutely highlighted how important it is that the people seek individuals who can represent them well. Our family business equivalent occurs when we elect boards to oversee the enterprise (and protect shareholder value), and when we elect family members to serve as heads of our family councils, committees and task forces. We need people who understand their charge, accept responsibility for outcomes, and whose judgment will bring gains for the enterprise or family body. Our decisions about who will represent us should reflect our confidence in their ability increase our capacities while respecting our values, vision and culture.
Family businesses often pride themselves on maintaining a strong and consistent culture built on the family legacy and values. While this adherence to a strong culture can be one of the greatest strengths of a family business, it can be particularly challenging when entering foreign markets.
Family businesses that successfully expand beyond their country borders manage the balance of loose and tight controls. They identify the key elements of their culture – the ones they can’t operate successfully without – and develop ways to transmit them across borders. Transmission mechanisms may be formal – such as training programs or job evaluations that measure adherence to culture. Or, they may be informal, such as visits from headquarters personnel to remote locations or opportunities for managers in remote locations to visit headquarters.
At the same time, successful international family businesses understand when they need to relax their culture to accommodate differences in international markets. Successful international family businesses in a recent study unanimously supported the empowerment of local management to run their international operations. Clearly defining priorities for those managers at the outset, gathering data that allowed home country management to track performance and hiring strong in-country talent were all identified as keys to success.
Family business owners think a lot about how to determine the “fit” of a prospective non-family executive in a values-driven family company. Some recommend visiting the candidate’s home; some suggest dinner with spouses. Others find many interviews with both outside executive and with some family owners to be valuable.
A recently heard story comes to mind:
The evening after a first interview a family-owner is, unbeknownst, at the same theater as a candidate. Not yet having an opportunity to go greet the candidate, she observes him tipping the parking valet to get to the front of the line of those waiting.
Paul Hawkins of the University of Portland, recently said the following:
“When asked if I am pessimistic or optimistic about the future, my answer is always the same: If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand data. But if you meet the people who are working to restore the earth and the lives of the poor, and you aren’t optimistic, you haven’t got a pulse”.
In providing support for the communities in which they provide employment, manage supply chains and enjoy a customer base, family firms have demonstrated an extraordinary willingness to give back. Much of this is connected to their values which include the need to support the wider “societies” in which they operate.
However, increasingly, giving monies is insufficient for family firms. They want to get involved in the causes they support in a hands-on way. Some are beginning to treat their philanthropic support and donations as they would any other investment. Family firms are beginning to measure their ROI in emotional, spiritual, political, commercial and social terms.
A group in the UK called “Achieving Impact”, run by James Plunket, works with families to align their values to the political, social and environmental needs of those to whom they give. Families treat their investment in land/machinery/people in the same way they treat their investment into charities. They work to build KPIs that help them to measure the impact they are having. Performance measurement becomes a key element in the philanthropic endeavours of family firms. Some families ask:
are we collaborating with other providers (social and political) for the greater good?
to what extent are we proactive in our giving vs. reactive?
do we combine with institutional investors who are ethical?
Workplace spirituality has continued to gain acceptance as a topic of study in B-schools across the country, presumably with application to practice within organizations. Though it may have been initially viewed as a passing fad, it now seems to have reached trend status that is distinct from religious connotation. In fact, even management textbooks routinely include sections about “workplace spirituality” and professional organizations like the Academy of Management offer membership in special interest groups emphasizing spirituality.
So, while any number of families associated with successful businesses may also be associated with a strong community of faith, if one of the many emerging definitions of workplace spirituality is looked at in the context of a family business, it starts to become clear why businesses with family at their cores also tend to be naturally spiritual workplaces.
Here’s a recent list of hallmarks of spiritual workplaces. Over the next week, I’ll be writing more about the three that seem to most show up in family businesses. I welcome your comments. The hallmarks are: Emphasizes Sustainability, Values Contribution, Regards Innovation, Cultivates Inclusion, Develops People, Promotes Vocation.
Tony Leahy, the retiring CEO of the UK’s largest retailer, Tesco, offered great insights to what’s different about family firms. Though Tesco is no longer a family business, he explained, “Tesco began life as a family business and one of our strengths is that we’ve not forgotten the values and approach we inherited from our founder.”
He goes on [the underlining is mine]: “We have a stable management.” In fact, he and many of his top management colleagues spent their entire careers at Tesco. “Our employees are encouraged to own a stake in the company; and there’s a willingness to take risks and to plan for long-term value creation… they enjoy the benefit of loyalty, long-term thinking and the courage to make bold decisions. Add to that a slim line, tight management and the stability families can bring and you have laid strong foundations for a powerful company.”
He closes with a profound observation about the distinction of family company ownership when he asks fund managers who invest in listed companies to consider, “Next time you’re in a meeting with management from a company…try referring to them as ‘we’ rather than ‘you’.”