“Business is business!” That phrase is commonly used to squash any position that would negatively affect the bottom line. It sidelines considerations outside of the profit motive whether those considerations are humanitarian, ethical, spiritual or familial. After all, “it’s only business!”
Nowhere does that mindset miss more than in a family enterprise. The family dynamics factor in a family business is strength and a weakness, an opportunity and a threat. The family dynamic so permeates the culture of a family business that ignoring it is like dismissing genetics in our biological makeup.
“Business is business!” Tell that to a parent feeling the need to discharge a child for poor performance. Or inform a child, looking for a way to gently relieve an ageing parent with dementia from doing any damage, that it’s OK because “it’s only business.”
“Business is business!” Try that on a sibling team at odds, but looking for a way to work it out for the benefit of their families, the employees and the founder’s legacy.
Let’s flip it around. When “business is business” is the code of behavior in a family firm, how would the family be impacted? Suppose a matriarch/patriarch sells the business without consideration for his adult children whom have worked in the business for decades under the presumption that one day it would be theirs. Instead, they register for unemployment without a payday in sight. Consider when adult children withhold visitation of grandchildren from their parents to force them into unfavorable decisions.
Clearly there are times when the profit motive and the family dynamic don’t mix. Yet, they both present a vital component for the well-being of the stakeholders. Creating the correct balance between the two is critical for family harmony and business success.
The last strategy to employ is “business is business.” It implies that the family dynamics is irrelevant – full speed ahead into the iceberg. How’s Thanksgiving dinner at that table. Instead, it makes sense to merge the family and business in a way that benefits both, although maybe neither individually at 100 percent.
This is for certain, ignoring the family dynamics in a family business will lead to ultimate disaster. It will destroy family relationships for life. It will create an ugly corporate culture. It will end up like the monopoly game of real life – someone winds up with all the property and money, but no friends or family.
We all know it starts at the top. Organizations take on the personalities of their leaders. If the top is a family, then the business will take on the values, ethics and visions the family holds. Some family businesses even punctuate that idea in their marketing by making their family ownership a strength and opportunity. Many family firms include language about the family in their Vision/Mission statements.
Families that do well over the long haul in business together recognize the need for balance and they address the issue directly. They educate themselves about best practices and initiate those practices. They keep lines of communication open to all stakeholders – both inside and outside the family. They use outsiders to prevent “groupthink.” And they expect their company professionals to understand the importance of family dynamics to the business.
Best Practices for Family Businesses:
- Hold regular Family Meetings with all family stakeholders to discuss the business.
- Establish an Advisory Board with true outsiders that meets at least quarterly.
- Set appropriate Boundaries between the family and the business.
- Design and implement a Strategic Business Plan.
- Maintain Transparency throughout.
- Develop a Family Constitution (a living document) to digest agreements to writing
Injecting these best practices into the DNA of a family enterprise isn’t easy and usually takes the employment of outside professionals well trained in the field. It’s difficult to maintain the ongoing tactical daily needs of the business while working on the family strategic interface, but the outcome is worth every bit of the effort. The outside professionals are the catalyst needed for the final formula.
As you and your family go through the process of developing these best practices, ask yourself where exactly does “business is business” fit.