Family-Owned Companies Are Different
How are family-owned companies different from publicly-owned companies? The major difference we have seen centers on the kind of relationships created over time between employees, company leaders and the organization. Depending upon the values of the founding family and the success of the business, these relationships many times build a culture where loyalty, respect and caring for people – customers and employees are rewarded.
An example of this kind of culture is clearly illustrated in an article about family-owned construction businesses, based in Georgia who shared the profits from the sale of the companies with their employees. Employees received $1,000 per year of service with employees receiving checks ranging from $1,000 to $45,000! (‘We wanted to share our good fortune’ by S.A. Reid, Atlanta Journal & Constitution, 5/5/08)
The current 2nd generation family member leader, Doug Walker explained their action in this way.
“You see so many big companies have executives more interested in gaining money for themselves and don’t look after their employees…We believe if you care about employees, they are going to look out for us. When we sold the business, we wanted to share some of our good fortune with the people who helped us get there.”
As can be expected, a positive aspect of an organizational culture can also bring some unintended consequences. One of the most difficult consequences in a company where the values of loyalty and caring drive the rules of behavior is that loyalty many times is rewarded over performance. In this kind of workplace, employees expect their dedication to be rewarded through job security. If long-term employees do not perform, they are many times not given feedback and simply relegated to jobs of lesser responsibility, but still taken care of. A culture of entitlement grows and hinders the ability of the company to innovate and execute.
The key for leaders is to find a way to balance rewards for long-term service to the company and its customers while at the same time putting in systems where performance against goals can be measured and rewarded as well. Loyalty and performance are not either-or company values; they are requirements for success in a fast-changing marketplace.
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