Saturday, September 21, 2019
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Effecting a Culture Shift in Your Family Business

Sometimes a change in a family business culture is needed, such as when the existing culture promotes destructive decisions or creates obstacles for the transition of ownership in accordance to a succession plan. However, for many family business leaders it is difficult, if not impossible, to objectively assess their own organizational culture. In fact, many family business leaders are unaware of the effects their beliefs have on the organization. And, as W. Gibb Dyer, Jr. points out in his article, “Culture and Continuity in Family Firms,” even more difficult than assessing the culture is changing it once it has become developed. That is because the family establishes the culture based on internal beliefs. Only by changing their beliefs, changing leadership, or undergoing a crisis can a culture truly shift when needed. The key is to take steps to evolve the culture before a crisis erupts.

One way to proactively change your family business culture is to assess your leaders’ and business’s assumptions, values, perceptions and artifacts (see our article Your Family Business Culture – What It Is and Why it Matters for more information on these) to identify patterns that indicate your culture points to a specific type. Then once you have identified the kind of culture your family business has, and what its advantages and disadvantages are, you can take gradual steps to change it. You’ll likely find that you are too close to your family business culture to complete an unbiased and thorough assessment all by yourself, in which case you will want to secure the assistance of an outside consultant. If it is determined that your family business is in need of a culture change, your family firm can utilize tools such as estate planning, restructuring, incentive programs, training, independent boards of directors and supervision policies to help guide your firm toward a gradual shift in the desired direction.

A culture can also be changed by changing the structure of the leadership team – those people who create the culture in the first place. To do this, the management team must be comprised of individuals who hold the assumptions, values and perceptions consistent with a desired culture – at least in a key area in need of change. Replacing a leader whose beliefs are in conflict with the desired culture with another leader whose beliefs fall in line with the desired culture can help create a hybrid culture for the business immediately, and ultimately shift it completely to a different culture type as additional management changes are made. In a more drastic approach, such as might be needed in times of crisis, the entire leadership team can be replaced with outside professionals who generally share the same beliefs as held in a desired culture type.

Regardless of how a culture change is effected in your family business, it can be a very stressful and difficult process for the family and employees. Nonetheless, creating shifts in your family business culture is often necessary for its survival and can help ensure your family business builds a lasting legacy.

Source: “Culture and Continuity in Family Firms,” W. Gibb Dyer, Jr., published in The Best of FBR II from The Family Firm Institute

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