Vision statements and gaffer tape: how to tackle problems in a family business
“When I park the car at the factory, there’s a piece of gaffer tape they’ve put on the floor, I’ve got to walk from the gaffa tape all the way through to my office without talking to anyone at all. Apparently I keep interfering.”
That’s one approach an Australian family business has recently resorted to, to deal with the sticky issue of transitions in the family company. And, Robin Buckham, CEO of the Family Business Australia hears plenty of similar war stories.
The problems with any business are varied, but in a family business, communication issues often sit at the heart of many problems, and the solution says Buckham, lies in establishing governance mechanisms that allow for greater agreement and communication.
“There’s what we call the Prince Charles problem," she explains. different generations are ready with a new vision, doing things online, taking the business into China, for example, but they feel held up by the generation before them, that used be entrepreneurs but are now luddites.”
“Family businesses need an agreed vision. And many of our members find that the value is as much in having the conversation and creating the vision as it is in the statement itself.”
There are 480,000 family businesses in Australia ranging from the local corner store to the Gina Rinehart family's Hancock Prospecting. They are a cornerstone of Australia’s economic development and employment base.
The Family Business Survey 2015 produced in partnership between KPMG and The University of South Australia found that 80% of family companies have experienced more conflict over the past 12 months than in the 12 months prior. The survey ranked friction over vision, goals and values as the number one source of conflict.
The elephant in the room that looms largest for some many family owned businesses is the issue of transition: when will it happen, and what will it mean?
Creating a shared vision is an excuse to bring everyone together to plan for the future and identify the issues before they become a problem. “It’s about naming the values - there’ll be there. even if you don’t like it.” Naming the elephant is the first step to dealing with it.," says Buckham.
In fact, the development of a shared vision for a family business and the associated mission and strategy can be the very thing that distinguishes outstanding family enterprise performance. Research has shown that family businesses outperform public companies on key dimensions such as stock price and return on equity, according to INSEAD’s Wendell International Centre for Family Enterprise.
The clarity a business creates when setting a vision is particularly important when the business includes managers from outside the family. If the family owners are not united, committed, and responsible, managers are hampered in their work. When owners are clear about their values and the direction, they strengthen the business' culture which impacts positively on performance.
Family vision versus business vision
Actions that benefit the business can hurt the family, and family conflicts can threaten business performance.
One approach to mitigate this, recommended by multigenerational business expert, David Harland, Managing Director of FINH, as well as by the Wendel International Centre for Family Enterprise is to acknowledge the competing values and needs of the business vision and the family vision and to create separate, parallel visions for each.
“This way, there is a valid outlet for family issues and they do not necessarily have to be included in the business vision and mission statements,” says Harland.
Family Business Australia offers a referral service for members who are struggling with governance and communications issues. They also provide support for family companies who are starting out on the journey to build a vision, mission and strategy. "It can take up to five years," says Robin, but the value is immeasurable. Further support is offered by the family business community. "This is a sector that loves a war story, and families are enormously generous in talking about the time when things went pair shaped for the company and how they got themselvs out of it. It's a great way to learn.
Walking the talk: Vision at the Family Business Association
Our vision at Family Business Australia is 'to sustain and grow businesses in the sector'. We don’t focus only on our members, but act broadly across the sector, lobbying bodies including the ATO, ACCC so that their policies are informed by the needs of the important sector.
With acknowledgement to Robin Buckham, CEO, Family Business Australia