“To know what is right and not do it is the worst cowardice.”

- Confucius

    In every family business each decision maker includes their personal beliefs in each of their decisions.  Some family business decision makers using the same set of “rules” to make decisions call this the family “culture,” while other families in business title it their “value system” or “ethics” and still others have even called these beliefs their “mission statement.”  In many family businesses how these rules take shape and how they are defined within the family and family business usually resides in the leader of the family business, commonly one of the parents.  Unfortunately in most family businesses there is no formal, written description of what “ethics” or “culture” mean to the family and the family business. 

     Many of the failures of family businesses are due to the inability of the members of the family business to effectively deal with the emotional issues that are inherent when family members work together.  We are convinced that these failures are directly related to the family’s failure to agree with, place in writing and effectively enforce the rules for working together including their description of “ethics” or “family culture.”  We are also convinced that the biggest missing piece is not the mission statement (which most family businesses we have worked with do not have or if they do, do not practice) but the implementation of the ethical and cultural beliefs of the family.  Beliefs that will always be used when family members make personal and business decisions.  Beliefs that will subdue individual “all about me” emotions to a culture that places “what is right” before “what do I want.”  When the family business members are in agreement on these beliefs, including the key non-family managers of the family business, and they collectively live, make decisions and act by those set of beliefs, a family business culture is established.  When this “culture” is known, understood, and practiced, as well as handed on from generation to generation solid family business reputation go with it and the “staying” power of the family business increases.  When this happens future generations carry on the “ethics” and “moral courage” of the family and the family as well as the business remains strong.       

    In the book “Moral Courage” by Rush Kidder, he identifies ethics as being more than right versus wrong, or fairness versus compassion.  He states that ethics must include “the moral courage to put (ethical) decisions into action.”  We agree.  Ethics in the family business must revolve around doing the “right thing,” making the “right decisions” with a complete alignment of values, beliefs and behaviors that include the moral courage to put these principles into action.  When these principles are not understood or practiced it will be the personality of the next family business leader that will re-define the culture of the family business.  Many senior generations are surprised at how much the basic “culture” of the company changes when the next generation takes over.  We believe that this dramatic change of family business culture is due to the lack of shared and lived values, ethics and courage from one generation to the next.  This failure of the senior generation, we believe, has a direct impact on why two-thirds of family businesses fail by the end of the second generation.   Rush Kidder of the Institute of Global Ethics stated, “Ethics is not a luxury or an option.  It is essential to our survival.”  This is especially true for family businesses.

    The following are our definitions of the ingredients needed to stop the generational erosion     of family businesses:

                        Values – the belief or standards that guide how we live our lives.
                        Ethics – a system of moral standards that allow us to know what is morally                                       right and wrong.
                        Culture – a group of people who share the same values and ethics.
                        Moral Courage – continually putting your values and ethics into action –                                                      this identifies our individual character, our code of conduct.

    When we just look around our communities, our states, our country and our world we can see what is happening to the principle of ethics.  At every turn individuals are turning ethics away from a solid moral standard into a choice of doing whatever feels good at the time, or whatever makes me the most money.  Without a system of ethics, there is a loss of respect for one another.  There is a loss of respect for what others before us have done, for what they have contributed and for what they did to allow us to have the lives we have today. 

     With the average age of family businesses only 24 years and with less than 10% of family businesses surviving into the third generation and the fact that less than 10% of failed family businesses actually do so because of financial reasons, we believe that the need for work on family ethics is critical for the survival of family businesses. 

     Ask yourself and your family members in business this one question, “What are the moral standards as a family and a family business we should be living and making decisions by?”  The answer will move you, your family and your family business down the path to instituting a family culture that will be morally right.  This family culture will giving each family member the courage to live what is believed and to make decisions that are consistent which in turn will allow your family business to miss becoming one of the failed family business statistics.

Contact us – we can help you identify the ethical compass for your family business.

jim@challengesinc.com - ann@challengesinc.com
LaurenOwen427@gmail.com - sboros@zoominternet.net 888-273-8307
For more information on solutions to Family Business challenges – visit our web site at: www.challengesinc.com and watch for our new blog at: www.familybusinesschatter.com
           
            On Thursday September 17th at 1:00 p.m. EST we will be presenting a webinar entitled “Don’t go it alone – How to put together a great Board of Directors for your company.”  Only $25.00 per connection.  Follow the link to register!      http://brs-seattle.com/boa.html