Family values are business values, too

Many books and articles about families in business and business in general simply boil down to a step-by-step solution for optimizing the business system.

This article will discuss how families in business provide a template to identify, communicate and practice timeless core values – those values applied primarily to relationships within the family and permeating all elements of the family business system.

This template, when used to teach and transfer core values in a non-family organization, can achieve formidable power, influence and results. If there is no discussion or awareness of core values or assumed answers to the large questions of life, a step-by-step solution becomes difficult to implement.

Edgar H. Schein, an early writer about organizational culture, asserted that founders of companies display strong assumptions about reality, truth and the nature of the world.

This is a profound assertion. In a classical academic setting, academic disciplines were and are subheadings under philosophy, what we can know and define. Our understanding of reality determines how we think, how we operate. Philosophy encompasses more than the physical world; it includes assumptions about the purpose of life.

Family business systems are the ultimate universities, discussing academically what we can know and define and exposing how reality affects families, business, wealth and society.

Some may dismiss this approach for family business systems as being too abstract or theoretical. However, the culture of a non-family business or family business is a set of assumed answers about how the world is and ought to be, which is shared operationally with others.

Everyone operates from assumed answers to the following questions:

▪ Where did life come from?

▪ Who are we?

▪ What is meaningful?

▪  How can we add value to our families, our business, our wealth, our community and society?

Family business systems are the natural venues for discussion of these questions and how they work within the culture of the family. The nature of reality and truth is an essential component of organizational culture.

Non-family organizations struggle to establish a shared view of how the world is and ought to be.

Reality is by nature public and open book; our understanding of reality will define how we treat others, especially those who disagree with us. This applies directly to freedom of communication, which is vital in families and organizations.

Some well-publicized problems within family business systems tend to create a public and media perception that families in business struggle to apply generally accepted business strategies because of family involvement.

Issues like nepotism and family ownership are presented in a generally disparaging nature in management literature. Non-family organizations experience the same struggles (favoritism, succession within management) but the struggles are not generally publicized or identified as relationship issues.

A common approach is to highlight the struggle to effectively manage the interplay of family and business but not focus on the similar struggle of effectively managing the combination of non-family and business. Further, there is scant awareness that problems plaguing non-family organizations could be resolved using family business systems strategies.

A good summary of a wrong assumption is somehow combining family with business is inherently unbusinesslike.

Families in business explicitly recognize the foundation of relationships for any type of business. The relationship template of family business systems, as contrasted with non-family business systems, optimizes communication and transfer of vision and values.

Relationships provide the best refuge for honest assessments. Organizational culture relies on the definable existence of interaction between people combined with shared experiences and narrative. This is the foundation of families in business. The obstacle for non-family organizations is competing with the time invested by families in the family arena.

The phrase “social capital” focuses on relationships in businesses because it is critical to understand how economic activity is embedded in a social context.

Recent papers have extended social capital by naming it “family capital” and applying it to family business systems. Some scholars coined the term “familiness” to define the family’s bundle of resources developed over time.

Some form of culture exists in family and non-family businesses.

Organizational culture, organizational identity, social capital, social capital in family-controlled businesses, family capital, familiness are all terms with overlapping definitions. The essence of the various terms are relationships and the attributes that optimize relationships by improving communication about reality and building trust.

This story was originally published October 30, 2014 at 7:22 AM with the headline "Family values are business values, too."