Family businesses are known for their close connections to communities. Do they have an edge in sustaining social impact?
When times are hard, what parent hasn’t wondered how to meet the needs of the present, without compromising the ability of their children to meet their own needs in the future?
It’s an age-old question. For a family-owned enterprise seeking intergenerational longevity, it doesn’t matter how many generations have been at the helm. What matters is progress.
In other words, executive family members who eventually withdraw from an enterprise should leave it in better shape than when they began. A timely and smooth succession is infinitely better than an acrimonious break-up or a fire sale, right?
I once interviewed a third-generation son of a large Canadian family enterprise. The business, which is more than 110 years old, began as a steel mill. It later moved into building materials, then morphed into a department store. Eventually, it became a successful art supplies retailer.
Today it is a nationwide company whose next generation is making a go of diversifying into IT services. This latest direction is the result of an intrapreneurial push by the family. That, and a number of heartfelt dinner-table conversations between the son and the patriarch.
It attests to a world in continuous change and responsible stewardship, not just for today, but for many stakeholders including future generations, which comes naturally to many family-owned businesses.
In this particular case, the senior generation worked to meet the needs of the present, without compromising the ability of the rising generation to meet its own needs farther down the road.
The family business changed dramatically over time yet the offspring were cared for to the extent that they had freedom of choice as to how and what they would become within or outside of the business.
It is the modus operandi of many family businesses and unlikely to change. What is changing is the terminology.
Many family firm commentators have swapped “longevity and legacy” for “sustainability and impact” when trying to explain the sense of commitment – including a long-term focus on customers, suppliers, and communities – that characterizes entrepreneurial families.
In the early years of any family business, the first community that the family will support is itself. Therefore, it is the nature of a family-owned enterprise to first engage its own – wider family and offspring – to create a sustainable impact, which is to build a business that contributes to the economy over generations.
Family businesses are fertile training ground to address sustainability because they are fundamentally geared towards intergenerational longevity. They are also naturally inclined towards corporate social responsibility in that they must consider the impact of their actions on others early on.
It’s not rocket science. The way to engage a community and create a sustainable impact is to emulate the actions of a healthy family, especially those whose values include honesty and loyalty, and who have a firm understanding and belief in why it does what it does to exist and thrive.
In other words, show communities why it makes sense to run a business, or country for that matter, like a healthy family. That is, in a manner that manages human, natural and financial capital to meet current needs while ensuring that adequate resources are available for future generations.
Engaging a community is to sustain it. Take a leaf out Tamarack Institute’s playbook. The Canadian consultancy’s “community engagement continuum” comprises five pillars:
But it is Tamarack’s recommended approach (see parentheses) for each pillar that’s worth noting: Inform (Here’s what’s happening), Consult (Here are some options, what do you think?), Involve (Here’s a problem, what ideas do you have?), Collaborate (Let’s work together to solve this problem) and Empower (You care about this issue and are leading an initiative, how can we support you?).
These approaches could easily fit into any family-owned enterprise looking to thrive over generations.
Engaging a community to create a sustainable impact should be as easy a dinner-table conversation.
In fact, it is often how it begins.
Compass for Entrepreneurial Families