Understanding the Importance of Culture in Family Businesses
While workplace culture has gained a lot of attention lately, it’s always been a cornerstone of a thriving and prosperous family business.
When you stop to think about it, everything truly vital within your business happens as a result of human decision-making and human relationships.
In other words, your culture.
Your family business culture is largely an outward display of the team’s shared attitudes, values, goals, and practices, plus the health of the relationships within your team.
As top family business advisors, we recommend that leaders spend the time, energy, and other resources it takes to build and cultivate the kind of culture that not only expresses your values but also propels your company into the Prosperity Zone.
While committing to a culture of excellence can be challenging and take time to fully implement, our years of experience have shown us that the rewards are well worth the investment.
Here’s what you need to know about the importance of culture in family business.
A Good Culture Increases the Value of Your Family Business
We believe that the people who compose your family business are your greatest asset – even though you won’t find them listed on your balance sheet.
Because 75% of your business’s valuation is based on non-financial factors – the right people, in the right environment, with the right tools and processes, can greatly increase the profitability of your family business and ultimately make it more valuable.
Culture Makes Your Business a Great Place to Work
An open and healthy culture makes a family business a great place to work, a great way to serve one’s community and a great partner for your customers and other stakeholders.
When you’re in the Prosperity Zone, it’s easy to see and feel your culture: its vibe, its energy.
Your employees are engaged, and your customers give you great reviews.
Which means your family business culture can be a secret weapon when it comes to attracting and retaining top talent in your industry.
Culture Helps Attract and Retain Talent
Team members who are valued as top talent typically look for healthy environments in which they can thrive – where they are encouraged to experiment, debate, learn from failure and consistently push for better results.
Your ability to deliver this kind of environment is a powerful recruiting tool – and it often makes the difference when other businesses come courting your strongest team members.
It’s important to remember that when you’re competing for talent, every other business out there represents your competition.
But – when you compensate team members appropriately and give them a healthy environment that empowers them to do their best work, chances are they won’t want to leave, even when presented with the opportunity.
When team members feel purposeful, heard, understood, and celebrated for their accomplishments, they are much more likely to stay with your business for the long haul.
But this kind of culture doesn’t happen by accident. It takes thoughtful intent and continuous support.
Your Leaders Create Your Culture
Tending to culture is one of the most important tasks a family business leader takes on.
Quite simply, leadership creates culture – whether intentionally or by accident.
Thoughtful, intentional leaders define the culture that best illustrates their family business values, and they take steps to build and maintain it.
Other leaders create culture through inaction, allowing the worst employee behavior and an overall lack of accountability to shape what defines their family business culture.
A Healthy Culture is Centered on Accountability
A family business with a healthy and vibrant culture will center on accountability. And that accountability begins with your top leadership.
If leaders aren’t accountable for their actions and performance, it’s misguided to expect anyone else to be. One of the most important things your leadership can do toward building a culture of accountability is to model it.
Then they need to talk about it and to insist on it from their teams. Making sure the team understands what top performance looks like, along with the incentives for achieving it, is a large part of leadership’s role.
It’s also essential to put the right structures and behaviors in place. These include hiring for character, responsibly escalating issues, defined professional roles with clear decision ownership and transparent goals, and effective meetings with agendas and stated outcomes.
Culture Creates Competitive Advantage
A tremendous body of research now clearly connects the dots between healthy company culture and business success – and we’ve seen this come to life in our years of family business consulting.
Healthy cultures display high levels of trust, which can be the secret ingredient of any successful team that delivers an elite performance.
Especially in tight market conditions, your culture acts as a serious competitive advantage.
Employees who are highly engaged provide better, more authentic customer service, display greater speed and productivity, solve problems faster and report both increased sales and greater innovation.
Your competitors can always copy your product or service, but they can never replicate your distinct culture.
When you build a culture that is customer focused, your team will never be in doubt about the value your customers bring to your business.
And they’ll invest time and effort toward consistently gathering feedback from customers about how you’re doing – and they’ll course-correct along the way, based on that feedback.
A distinct focus on your customer also leads to greater innovation, in everything from your processes to your products and services.
Is your culture as vibrant as it could be?
If you’d like to talk more about how to shape the culture of your family business, we want to hear from you.
From leadership training to family business succession to building a culture of accountability, our top family business advisors can bring their expertise and insight to your situation.
Reach out today to connect with us. We’d love to help.
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