Often people talk about family businesses as having a very efficient business culture – more so than non-family businesses.
From our experience, that’s correct – there are indeed a number of positive elements to a family business culture that help drive success internally, particularly regarding organic growth in the business.
These positive elements can include:
- a long-term view on business improvement and development;
- values and leadership that are well-aligned to the overall business objectives and vision;
- a supportive team and family-orientated work environment and culture;
- a close understanding of strengths, weaknesses and overall family unit capabilities;
- a drive and motivation to protect and grow the business.
What not to do...
However, there are also some factors that can be quite toxic in a family business culture.
One defining element, where there is a negative impact, is where the business’s team is split into two ‘classes’ – i.e. ‘the owners’ and ‘the employees’ – and the two groups are treated differently, regardless of capabilities and performance.
Such an ‘us and them’ culture can be quite detrimental to business value in several key ways:
- Failure to give all team members the same opportunities and hold them to the same standards may eventually impact morale, performance and retention;
- When one ‘class’ is not pulling in the same direction as the other it will be difficult to align all team members with the business’s goals, impacting overall business performance;
- It can also impact the transfer of a business if it is sold to a third party, as it usually means deficiencies in the effectiveness of the management team. That can make it difficult for an outside party to easily manage the business in the early stages of ownership, without seeing a deterioration in the business performance and requiring more time, cost and resources to ensure the people platform is strong, going forward.
The gold standard
By contrast, in a successful family business, everyone is treated like family.
These businesses recognise that ‘the family’ doesn’t have all the expertise, and deliberately considers the best in class, whether they are family or non-family members, for roles and responsibilities at hand.
And if there is a family succession process, it is openly discussed and understood by all in the management team.
Our advisors are keen to assist in guiding you and your team on a path to developing a strong culture and enhancing your business value. Call us today on 02 6360 0360 or 02 9893 1803, or visit jpabusiness.com.au to book an appointment.