Last month, I had the privilege of attending a notable family business event titled "Preparing the Next Generation – So Wealth Doesn’t Screw Up Our Kids," hosted by the Delaware Valley Family Business Center. The event brought together an array of family businesses, from first-generation enterprises to families celebrating a remarkable century in business.
The central theme of the discussion revolved around the issue of family values converging with wealth. The presenter, John Nersesian, Head of Advisor Education at US Global Wealth Management, PIMCO, and various business owners in attendance, openly emphasized the significance of raising children with good character and integrity who contribute positively to society. This subject, while often background noise amid the myriad challenges faced by family businesses, is of paramount importance.
During the event, we participated in breakout table discussions that provided invaluable insights. One memorable statement from a family member at my table was, "The impact you have on your children comes more from what they observe you do than from what you say." This poignant reminder underscores the adage that actions speak louder than words.
Another attendee shared a meaningful tradition from her childhood: each year, her parents would have each child research and select a charity for the family to donate to. This practice not only involved family members of all ages but also instilled the importance of giving—a tradition she now continues with her own family. In today’s philanthropic landscape, with donor-advised funds and private foundations, involving all family members in charitable activities has become more accessible.
The significance of discussing such topics cannot be overstated. While educational events for family businesses frequently focus on governance best practices or the utilization of advisory boards, it is easy to overlook what truly makes a family business unique and resilient. The strength of these businesses often rests on the family members who run them, serving as either the cohesive force that binds them or the unhealthy fabric that may unravel them.
Practical Steps for Embedding Family Values
Incorporating family values into your business strategy requires deliberate effort and consistent practice. Below are six actionable steps.
1. Lead by Example
The behaviors and attitudes demonstrated by family business leaders set the tone for the entire organization. Consistently exemplify the values you want to instill in your family and employees. Remember the impact of your actions over what you say.
2. Establish Clear Values
Clearly defining your family and business values is critical. These values should be documented and communicated regularly to ensure that everyone understands and aligns with them.
3. Involve the Next Generation
Engage younger family members in business activities and decision-making processes. This involvement can take the form of mentorship programs, internships, or participation in family meetings.
4. Create Traditions
Develop family traditions that reinforce your values. Whether it’s annual charitable donations, family retreats, or regular volunteer work, these activities help embed values into the family culture.
5. Promote Open Communication
Encourage open and honest communication among family members. Regular family meetings provide a forum for discussing values, addressing concerns, and making collective decisions. Involving a facilitator to help run these meetings can keep them on track and establish ground rules for healthy discussions.
6. Foster a Giving Spirit
Philanthropy is a powerful way to teach values such as empathy, generosity, and social responsibility. Establish family giving practices that allow all members to participate and contribute.
The Long-Term Benefits
Embedding family values into a family business yields long-term benefits that extend beyond financial success. These include:
Benefit #1: Enhanced Unity
Strong family values foster unity and cohesion among family members, creating a supportive and collaborative environment – a unique strength that family businesses can cultivate.
Benefit #2: Sustainable Success
Values-driven businesses are more likely to achieve sustainable success as they prioritize ethical practices and social responsibility, helping to attract and retain key people within the organization.
Benefit #3: Positive Legacy
A legacy of strong values and ethical behavior leaves a lasting impact on future generations and the broader community.
Benefit #4: Increased Employee Engagement
Employees who share and align with the company’s values are more engaged, motivated, and loyal, increasing productivity and engagement.
Next Steps for Your Family Business
The event I attended underscored the critical role of family values in the success and longevity of family businesses. As family business owners, it’s important to prioritize and embed these values into the fabric of your operations. Doing so not only strengthens the business but also ensures you leave a positive legacy for future generations.
By consciously integrating values into your business practices, you’re creating an environment where both the family and the business can thrive. If you are looking to deepen your understanding of how to integrate family values into your business, please contact our family business experts.