Questions of loyalty and commitment are often moot, which is quite different in companies where ownership may be a distant investment firm and employees are bound together by little more than a regular paycheck. And although not all employees in a family business may be related, the bond and atmosphere are often more close-knit than other companies.
Cultivating Engagement
Being born into a business, however, is no guarantee of engagement. According to a recent report by Deloitte, younger members of intergenerational companies are very driven by the need to innovate, and cite it as their top issue when working in the family business.
Older generations in ownership are aware of these aspirations, but are less eager to pull the trigger; only 40 percent of those surveyed were willing to take on the risks associated with substantial change to the business model.
For those preparing to assume leadership in a multigenerational company, one third said they had been planning to take part in leading the company since childhood and 44 percent had been preparing for a leadership role even before they actually started working in the business.
Family firms are also slightly more likely to succeed than other types of companies, with a higher survival rate over the first two years by almost 5 percent. So how much of this has to do with blood ties versus other factors?
For Fred Duckwall, president of Duckwall Fruit in Hood River, OR, it cuts both ways: he believes “the sternest measuring stick of all” is employee pride; workers, whether family or not, have to care. “You support what you believe in.”
Fault Lines
Even the most successful longtime companies—family-owned or otherwise—are vulnerable to change precipitated by significant events. Any business without a written succession plan is at risk. While multigenerational companies may rely on informal agreements, this can cause conflict and even jeopardize the business when there is no formal plan concerning who will run the firm and what his or her responsibilities will be.
As many as 64 percent of family business owners take on the mantle of leadership without such written plans, representing a significant degree of risk. Tim Vaux, a strategic planner for consulting firm FreshXperts, states that leadership in all aspects of operations is crucial, but even more so in family businesses.
“Writing and regularly updating job descriptions for key positions is a must,” Vaux insists. “Seniority in the family is not necessarily the key to the executive suite; honest discussions must be held to sort out who is best in each key position.
