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How Values Affect the Family Business

Company culture is a difficult term to define, but somehow we just know it will be more of an issue in the family business. And, of course, it is.

What is this thing called culture? I've found that it's really three things.

Families often talk about their "family values", so let's focus on this single aspect of family culture.

Perhaps one of the most preventable reasons for the disintegration of the family firm is that family members hold differing and unclear operating principles. It's what I call "misaligned values", and it's as debilitating and insidious to a family business practitioner as misaligned vertebrae are to a chiropractor. It causes all kinds of other problems, and it just gets worse if it's not corrected.

Since actions speak much louder than words, the first step is to distinguish between the ideal values of a family business and the real values. This is one good reason why a neutral outsider is usually a better judge of its values than are family members themselves.

I once witnessed a meeting where the owner of a four-star restaurant showed his son his view on service, quality and honesty: "We've run out of veal," he said. "Use lean pork; no one will notice." Another owner told me he would share his wealth with his children only at death. His reason? "It's good to hold onto the money – it keeps the kids in touch."

Both of these owners would have done things differently if they had taken the trouble to write down a family creed that, over time, could guide everyone and act as a reference point.

Take for instance the founder who said his employees were fundamental to the success of his company, yet fought his daughter for over a month over whether to set aside a staff lunchroom. Only after long arguments did he recognize the gap between his concern for staff members and his willingness to allocate "business" space. They now have a lunchroom.

There is certainly a flexible reality that surrounds values. That's why successful business families discuss and document them. Talk alone will not work, because history and observation can turn it into noise. Nobody remembers what was said. Written values guide family interaction and behavior.

10 Ways Family Values Affect The Business:

  1. Work ethic
  2. Attention to issues
  3. Down-the-line decisions
  4. Who reaches the top
  5. Relationships with suppliers
  6. Relationships with staff
  7. Willingness to change
  8. Risk-taking
  9. Business planning
  10. Sharing information

Sometimes, however, "family" values are in apparent conflict with "business" values. Or one gets confused with the other. Families, for instance, tend to place a high value on respecting elders, parents loving their children and everyone protecting the weakest member. These values can cause problems in a business context.

In one case, a company founder with two sons had set up a system of performance review for compensation purposes. It was a genuine review with real parameters. But the wife of one son called her father-in-law and told him he would never see his grandchildren again if didn't give the son an immediate raise.

A mother in another family believed that family members should be compensated according to their need, not their duties. Therefore, she paid her daughter, who had two children and required a nanny, more money than she paid her son, who did a similar job but had no children.

Again, these cases raise the question of value alignment. It's not just a matter of everyone having some values, but of having one set of agreed-upon, appropriate family-business values that translate into deeds.

All successful business families need this glue to unify their partnership. To them, it makes a lot of sense. But as Will Rogers is often quoted: "Common sense ain't necessarily common practice."


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