This "Outside Consultant" column by Jon Keimig, director of the University of St. Thomas Family Business Center, ran in the Star Tribune on Dec. 13, 2021.
Family values are a key differentiator between family businesses and their non-family counterparts. And when used well, a key advantage. Family values create alignment for multiple generations of family members to drive decisions around governance, strategy, culture, hiring and family commitment.
Before a family can use values to strengthen the business, it must first identify its family values. One way to do this is at a family meeting. Members can discuss family values in the current and previous two generations and make a list of agreed-upon guiding values that define who the owning family has been, is currently and how it wants to operate going forward.
With these values in place, family governance becomes clearer. The family can use the values to make the important decision of whose interests come first – the family, the business or how to balance the two. Agreement of the values and what the balance of business and family needs should then be communicated to top managers. With this information they can then set a strategy to achieve the owning family’s goals.
When family members lead by example with their values in the business, the company culture starts to take root. Posting values around the office, rewarding employees when they live the desired values, and using values as annual review benchmarks and during hiring interviews can create alignment throughout the organization.
When employees identify with the same set of values, their job satisfaction increases. For some family businesses, these employees who live a shared set of values not only make the culture better, but also become the company recruiters, bringing in friends and family members for positions. They also act as a first line of vetting potential candidates to see if they could be a values fit in the business. Embedding and living values creates guideposts to make hiring, firing and promoting decisions much easier for managers.
It’s important to revisit the family values every year or two to see if they are still the values the family wants to continue running its business on. Values can change over time, especially over generations and as the family grows. The simple act of continual discussion about values can reinforce family unity, mitigate potential conflict and keep the family committed to the family and business, setting the stage for long-term success.
Jon Keimig is the director of the University of St. Thomas Family Business Center.