When “We’re Like Family” Is More than a Cliché: Cultural Lessons from Successful Family Businesses

September 21, 2022
Cultural Lessons from Successful Family Businesses

As an agency owned and managed by a husband and wife, Wilks Communications Group, has a special affinity for working with family owned and operated businesses. We appreciate the characteristics of flexibility, entrepreneurialism and nimbleness that come along with family enterprise. That is why we have spent decades advising other family enterprises, large and small.

In our experience, the most successful family businesses lean into certain traits that typify high-functioning investor-backed firms; rigorous governance, fact-based decision making, openness to external inspiration, and strategic succession planning.  They avoid getting mired in personality conflicts and focus their lens exclusively on what is best for the long-term health and success of the organization and its mission.

In this article we explore the aspects of organizational culture that more traditional non-family businesses can glean from their family-owned counterparts.

“Soft Rules” Should Be Spoken Aloud

A timeless 2014 white paper from the Loyola Family Business Center aptly summarizes pitfalls common to family business: “… poor communication, unresolved conflict, inability to adapt to changes, clashing values and expectations, and lack of a well-articulated, broadly embraced vision.” Unfortunately, this daunting description will strike a familiar chord for many business leaders today, family-owned or not.

A recent Boston Consulting Group (BCG) piece prescribes an alternative to such dysfunction with the concept of “soft rules;” the sometimes-unspoken guardrails that govern interactions among family business stakeholders. According to BCG, soft rules possess three characteristics: 1) they are based on emotion and values; 2) they are unique to each family; and 3) they evolve over time. While soft rules are not necessarily always explicit, BCG astutely argues that they should be, and that tremendous business value can be gained by clarifying and enforcing soft rules with conscious intent.

A recent Boston Consulting Group (BCG) piece prescribes an alternative to such dysfunction with the concept of “soft rules;”

Soft rules are especially important in family enterprises, where the dynamics of authority, decision making and change management can be opaque and complex. But in truth, every organization can benefit from sharpening its focus on the cultural and behavioral attributes that impact individual and company performance for better or worse. By acknowledging the fact that, when humans are involved, inconsistencies and misalignments can emerge from time to time and need to be addressed. It is only by accepting that these tensions exist, can organizations hope to resolve them, as the most successful family businesses have done.

What are your organization’s unique soft rules? Are all stakeholders equally aware of them? Equally aligned? Is it possible that your soft rules are due for an update?

Traditional Values Still Resonate Today

Given their deep and often intergenerational roots, family businesses have a unique advantage in building the type of committed, values-based culture that many non-family entities can only aspire to replicate. While interweaving the bonds of blood and business can be messy at times, it can also be incredibly powerful, as the camaraderie and promise of shared personal risk and reward brings out the very best in leaders and employees alike.

While you cannot manufacture a founding family, any firm can adopt, and nurture certain core values often associated with family organizations. Harvard Business Review names integrity and tradition top among these.

Of course, integrity is an underlying principle of any reputable business. But how might your organization’s culture change for the better if the idea of integrity were brought into the light, codified in company values and explicitly celebrated in corporate communications?

When it comes to tradition, it is a mistake to assume that this value is only available to firms that already possess a long history. Any story can be told through the frame of tradition, if doing so rings true for your organization. Does your product or service embody favorable traditions within your sector? Are you inventing the traditions of tomorrow today, through innovation? How might leaning into these strengths enrich your organizational culture?

Celebrating the founding lore of your organization, family owned or not, can be a great unifying bedrock that can inspire every new generation of employees.  A great example of this is the iconic HP Garage, where Hewlett-Packard (HP) was founded nearly a century ago. Today it has become designated a California Historical Landmark and is listed on the National Register of Historic Places where it has become a cultural mecca for entrepreneurs everywhere and a touchstone for HP employees everywhere.

Taking the Long View Pays Cultural Dividends

Because they are typically unfettered from the chains of outside investors, family businesses can more often prioritize long-term goals to drive competitive advantage and serve customers, rather than focusing on short-term gains. This yields a number of cultural benefits over their public company counterparts.

In a business world addicted to immediate returns, family operations can typically be more patient with investments, willing to stick to a vision and ride out periods of slow or inconsistent growth for the promise of a larger future payoff. This willingness breeds loyalty and a sense of ownership organization-wide, as employees experience the emotional rewards of sustained organizational confidence in the initiatives they have worked on. Compare this to the quarter-to-quarter “strategy whiplash” that typifies many public companies, a common source of employee apathy and burnout. A 2020 Gallup Report spotlights this issue, confirming that burnout is not merely a function of how many hours teammates put in, but also a response to how supported (or not) they feel in their work.

Family enterprises also engender employee pride by taking an active role in supporting the communities in which they do business. A great example of this is in Columbus, Indiana, a city of less than 50,000 people which The American Institute of Architects ranks sixth in the nation for architectural innovation and design – right behind Chicago, New York, Boston, San Francisco, and Washington, D.C. This legacy is the direct result of the civic commitment of J. Irwin Miller, long-time head of Cummins Engine, who believed that successful companies needed to satisfy five major stakeholders: customers, employees, partners, investors, and the community. He therefore established a foundation to attract world class architects to transform the city into what is today, a global mecca and living museum for modern architecture and art, which by the way also benefited his company by attracting world-class talent.

In our experience, the best organizations, family owned or otherwise, have the courage to set aside a portion of their bandwidth for longer-build opportunities or exploratory projects that can serve the needs of customers and also provide sustained career satisfaction and growth for employees. In a world where family values can sometimes be seen as old fashioned or out of touch, we advocate for embracing them as a means of nurturing a sense of shared momentum and continuity within their organizations.

At Wilks Communications Group, we are committed to helping businesses reach their full potential in organizational culture, operations and business results. If you’d like to know more about how we might help shift your thinking for the better, let’s talk.


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