Family firms comprise approximately 85% of all business enterprises in North America and ethics building has never been more important to maintaining their success.
I recently addressed some forty family owned businesses at the University of Wisconsin’s Center for Advanced Studies in business to emphasize the value of enterprise ethics being deployed each day.
For those of you operating a family business or employed by one, there are a number of ongoing challenges that require your full attention.
One of the issues we discussed was vision. By that, I am referring to family members having a different vision for the business and different goals. At the core of these differences is a foundation not emphasizing ethics and values.
Another issue was lack of talent. I have observed the hiring of family members who are not qualified, lack skills that would be “core competency”, and leadership abilities for the organization. When these members cannot perform or are not working out, there is a clear inability to fire them.
How does this relate to monitoring ethics you might ask? The organization fails to create a culture that is values based promoting honesty, accountability, and transparency.
Another issue in multi-generational businesses is operating in an ultra conservative manner. Here we see cultures where older family members do everything in their power to preserve the status quo and resist change. Typically, there is a rejection of ideas proposed by younger family members undermining the very ethics they purport.
Make no mistake about this one my friends: being closed minded, pretending to listen, and not implementing new ideas is a sure path to a detonation of sorts.
Training is often weak or non-existent in family businesses. Discussions at the family dining table transcend specific training programs when integrating family members into the company.
As a result, little if any information is provided to a position in terms of defined duties, goals, and expectations. Moreover, I often see ethics and values not driving the enterprise in terms of sales growth.
Communication problems and resolving conflicts can be a huge challenge for family businesses. When two family members for example each own 50% of the business and cannot agree on anything (this happens more than you think), the business needs an outside advisor or arbitrator to consult with.
Believe it or not, many family businesses lack basic buy-sell agreements for family members. It is imperative that there is a clear plan on how to sell, close, or walk away from the business.
I remind and urge all family businesses to rethink the vision for the business. Who are you, what are you all about, and what value do you bring to your customers?
Growing and keeping a business in the family requires a strong foundation built on ethics and this must be monitored internally and externally. Have a board of advisors, board of directors, and inviting qualified non-family members into the enterprise is simply being smart and will provide a significant return on investment.
Family members need to think about their moral compasses and always monitor ethics.
There can be no shortcuts in this area or the results will almost surely lead to toxic cultures that choke lives.
As previously stated, moral compasses are our livelihoods and the core to success. Monitor and review them daily.
Do your best each day. No one can expect any more or less of us.
I wish you all of you a Happy Thanksgiving. Always be grateful, thankful, and humble.
Best/blessings, Mark
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