Family Businesses & Culture
13th February 2018
Family businesses are rightly proud of their purpose, heritage and values, which are so integral to their DNA and define their culture. Purpose provides the anchor for culture and employee engagement – so having clarity on what defines your purpose is crucial.
The key differentiator for family businesses is that their purpose is grounded in their organisation’s heritage and especially their founders’ commitment to customers and values. Indeed, the founder and their story is someone which employees and shareholders can unite and bond around. Purpose needs to be simple enough to help in making practical decisions, thereby linking to culture, and be based on an area of competitive advantage.
However, growth through scale, sector and geography of any organisation can present challenges in ensuring culture and the right behaviours keep up to speed with the size and shape of the company, without employee engagement being adversely impacted. Generational transition can be a challenge, particularly if there was a charismatic family business leader, who embodied the culture and represented the heritage. New leaders need to make sure they are championing values, offering a compelling vision, inspiring employees and modelling the right behaviours and leadership climate to ensure that the right culture and behaviours permeate the organisation.
However, whilst 72% of executives say culture is extremely important to organisational performance only 32% of executives say their organisation’s culture is fully aligned to their company’s strategy (Korn Ferry research). This gap highlights the need to focus on improving culture, behaviours and the direct impact on performance.
A leading definition of culture is by Edgar Schein at MIT Sloan School of Management:
“A set of shared assumptions, that have been learned over time, are taught to new organisation members, and are believed to be the correct way to perceive, think, and feel”.
The key here is that they are learned and indeed unconscious assumptions and beliefs influencing decisions made every day. To create effective and sustainable change it is necessary to re-align assumptions for behavioural change and impact. Uncovering those assumptions that drive ways of working and behaviours is the biggest step. It is only then that the connections between what we think and do are revealed, and only then that we can identify new links between how we can improve on vital areas, processes and on the impact on outcomes.
Culture forms by shared purpose and values, organisational messages and reinforcements, and actions and behaviours leading to engagement and performance. It is necessary to understand this sequential flow, and then build and develop it so the right behaviours are “in the muscle” of employees.
It is vital that the leadership team aligns around ‘must win battles’ and that there must be a clear vision of the desired culture required aligned to the strategy of the organisation, with honesty in identifying the gaps against the current state. The leader must see their success as integrally connected to delivering this cultural change. Crucial too is employee voice because cultural change starts and succeeds with ongoing honest bottom up feedback and top down listening – the employee on the shop floor must not be left behind with cultural change.
When efforts to change culture fail, it is typically because work has been done to change actions and behaviours, or organisational messages and reinforcements, but not clarity on the shared purpose and values. All family businesses started with a strong purpose and values, and it was a healthy culture that supported their growth. So, making sure that culture is still an area of competitive advantage, fit for the current organisation, does justice to the founder’s vision and ensures continuing success.
What type of organisational culture do you have, does it connect to your strategy and are employee behaviours aligned?
Do you know how you score and compare in your sector on employee engagement? Do you know what your derailers and accelerators are?
Do you know what role you can play as a shareholder, NED or executive director to support the CEO and HR Director in purpose, values and culture?
Andrew Notcutt is a Family Business Consultant at Korn Ferry’s global Centre of Excellence for family business. He supports family businesses across a spectrum of advisory services; culture and behaviours, employee engagement, reward, leadership, next generation development, succession planning, governance and board practice. He works with senior teams to provide tailored solutions aligned with strategy. He is a fourth generation member of his own family business.
Korn Ferry is the preeminent global people and organizational advisory firm. We help leaders, organizations and societies succeed by releasing the full power and potential of people. We can deliver a comprehensive and integrated service across all areas of executive reward advice, including governance, design, analytics, data and modelling. We hold remuneration data for 25,000 organisations and 20 million incumbents across all levels, sectors and geographies and are therefore able to offer unrivalled expertise in this area to family firms.