Leading Workplace Change™

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 2^nd 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.

Tags: Corporate Culture Observer, Leaders Leading by Terri – older, but wiser white lady
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 The Sunday New York Times recently had an article (6/15/08 by Anand Giridharadas) about a founder and his company - Mr. Mukesh D. Ambani and Reliance Industries. It is an epic story about a man’s drive, inherited from his Father to make a living for his family that evolved into something bigger - ”a revolutionary thinker with bold ideas for what India ought to become” - a visionary who is now the richest man in India - a second-generation billionaire.

The fun part for me in reading this in-depth article was to tie all the personal stories, company myths and the author’s insights into a simple picture of the Reliance Industries corporate culture.  As I finished developing my list of values, it looked very similar to some of the pioneering American-based companies that we have worked with over the years, but with clearly the feel of India. Some examples are - Mr. Ambani’s early childhood living in Mumbai’s “chawls” or tenements instilling in him the “combative mentality of an outsider.” - and his Father’s early ventures in the yarn trade business requiring a “special canniness…or creative maneuvering around the bureaucracy,” due to regulations of a socialist-leaning government.  

So if you have the chance, read this article about Mr. Mukesh Ambani and share with me what you think are the corporate culture values driving how his company Reliance Industries does business.

Tags: Good Books and Articles by Terri – older, but wiser white lady
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I just wrote a blog about a top-down culture which made me remember my first  visceral experience as a culture consultant in a company with a Daddy Knows Best culture. These kind of workplaces are similar to top-down cultures, but there is clearly a more family feel about the work environment where employees are taken care of; job security is usually guaranteed; and in return, employees are expected to be loyal.  There are not many of these Daddy Knows Best or Family cultures left as most companies broke the psychological contract with employees of life-time employment in the last 10 to 15 years.

But now, back to my first visceral experience with a Daddy Knows Best culture - we were presenting the results of our culture assessment to the top management team of the company - we had come to the point of offering recommended next steps, but then quietly, the CEO’s assistant came in and whispered in the CEO’s ear about something.  The CEO politely excused himself . No one said anything, we all just waited - 10 minutes - 30, 45 minutes.  It was very uncomfortable for everyone and it was clear (nonverbally) that it was our role as consultants to wait for the CEO to come back before we should continue.

I remember looking around the room and thinking that all of the company officers sitting around the table were male, the age of my Father and most likely had children my age - in their mid-30’s.  I suddenly realized that my Father was not infallible and that he probably sometimes worked in environments where he was treated like a child without any power.  I started to worry about the leadership of this company, of our country…  Finally, the door opened and the CEO came back into the room - we took up where we left off. 

The CEO led a spirited debate about our recommended next steps and then politely thanked us for our work.  We presented the findings to differing levels over the next 6 months, but follow-up actions were minimal. Within the next 10 years, this company was purchased by another company in its industry. Another time, we will talk about the delicate balance between loyalty, security and innovation.

Tags: Personal-Ah-Hah Moments by Terri – older, but wiser white lady
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