3 things values can do for family businesses

At a recent meeting with a third generation family business, it became apparent that the values that drive their business—the organizational culture around how they treat customers and employees, i.e., what’s important in the workplace—had never been set down on paper. When questioned about it, they explained that everyone at their place of business understood their values intuitively—that writing them down hadn’t been necessary.

Occasionally, when led by a strong first generation family business leader, businesses can get around clearly articulating your family values with little negative impact. However, when leadership passes to the successor generation without intentionally articulating and sharing their values, that company risks a scenario where the employees are all marching in different directions, as if to different drumbeats. If that’s disastrous for a marching band, it takes an even heavier toll on any family business’ ability to compete and be successful.

To put it simply, everyone within your organization needs to know the drumbeat. They need to know how to march. Just as surely as the drum major must lead with his baton, it is the responsibility of family business leadership to move from intuitive to intentional by driving organizational values into their organization, especially in successor generations.
How can strong organizational values impact your family business? Here's three ways:

1. It can improve your top line. What do customers want? Unless they are buying a commodity product, they want to be treated well and with respect. And that only happens when your employees feel as though they are treated well and with respect. Contented employees equals happy customers. Happy customers want to do business with organizations that make doing business pleasurable. If customers and employees are treated well by a company, it is no coincidence. These companies have a really strong culture built on a foundation of well defined values.
2. It can improve your bottom line. Good values also reduce costs by improving productivity and reducing turnover. Firms that have strong values and deliberately drive those into the business have less turnover than their competitors. Values-driven companies have significantly less turnover than their competition. There is a clear bottom line impact from reduced turnover. The cost of turnover has been reasonably estimate at 150% of salary because of expenses such as recruitment, training, low productivity and new hires.
3. It can make you feel great about where you work. What could be better than coming in the door every day to a place you want to be, where you feel passionate about the work you're doing and where meaningful relationships are growing right alongside profitability.

Values-based organizations support a vision for the kind of workplace in which you and your employees want to spend the better part of your day and the best years of your lives. It isn't easy to uphold your organizational values day in and day out. It means making tough decisions in terms of hiring, firing, incentive structures, and employee compensation and evaluation. But the outcomes justify the extra effort.