Assuring a Legacy Fulfills Intended Mission
By: Ron Dohr
Values provide a foundation of culture, in business and in families alike. Shared values can inspire people to take on great things and to accomplish difficult tasks. Such values can also help bridge relationships across generations.
Family businesses must weather recessions, declines in sales and profits, threats from competitors, and perhaps most challenging, conflicts from other family members. One thing that transcends all of these issues, and can help address them, are the common values bonding the family business.
At one fifth generation hospitality business, a successor generation has articulated their values and discussed how they might align those values with the fourth generation, for example, while a second generation financial advisory firm uses values as the primary indicator for hiring, retention and promotion.
Shared values help overcome the conflicts inherent in family ownership. When family and business pull apart over time due to disagreements, families need a compelling reason to stick together. Values can be that glue that bonds family and business.
There are three reasons why values are essential to preserving a legacy. First, they provide a template for decision making. Nordstrom is a great local example of a family business matching behavior and decision making with core values. At the heart of their culture is a core value of placing faith and trust in their frontline people to achieve a high standard of customer service.
Values tend to endure over time and help sustain the family business legacy when owners, decision-makers and employees incorporate such values into policies and practices. When owners, employees and customers alike can see values practiced within the organization as well as sustained as part of an enduring legacy, this can be a powerful part of a company’s culture and become a foundation for all decision-making.
Second, values inspire top performance. Values are great motivators for people. While financial objectives and incentives are important management tools, they typically fall short in building a vision for the future. Employees are drawn to work in a business that has values similar to their own. Core values provide a sense of purpose and can be a powerful source for attracting, retaining and optimizing employees over time.
And third, values also help the family business adapt to change. Time, the pace of change in business and economy, increasing competition and succession of business-owning generations all suggest the need to re-examine the family business values. Failing to change what needs to change with the times leads to trouble.
Family businesses use a variety of methods to communicate values in their business. Corporate creeds, mission statements, employee training, mentoring and strategic planning are all places where values have influence. The most important thing is to encourage managers and family members to give positive examples showing how values make a difference in the business. Including such examples in the company’s stories can be an excellent way to preserve the family business legacy.
What can you do to build on values in your family business? Here are a few suggestions:
- Write a family creed, values or mission statement, code of conduct or something similar that captures who and what the family business is all about.
- Hold regular family meetings: This can be an excellent medium for teaching values and putting them into action. Some families begin family meetings around the dinner table when children are young, but it becomes increasingly important in later life to formalize the process for tougher issues such as: “What responsibility do we have to give back some wealth to the community?”
- Conduct educational seminars and workshops: This is a great way especially to introduce multiple generations to topics of interest. Speakers can be tailored to suit any age group or need.
- Organize an active board: Experienced independent family business directors, such as other business owners, can help the family work on values. Directors may serve as a resource or sounding board for family ideas and questions on values.
- Pass on stories about the family business: In most successful legacy businesses there is evidence that family stories and parables are an excellent way to pass on established values. Such stories can be referred to at gatherings and social events and everyone knows about them.
In summary, it is important to notice where values come from and the importance they have in helping family businesses endure. Values help preserve family legacy. They help serve as a template for decision-making; they inspire top performance and they help the family business adapt to change. If such values are properly nurtured, communicated and effectively incorporated into family and business practices, and most importantly, accepted and/or modified by the successor generation, they will help assure the family legacy.