SUCCESSFUL BUSINESS OWNERS RECOGNISE THE RESPONSIBILITY OF STEWARDSHIP
Updated: Sep 7, 2021
The most successful business families understand that their enterprise isn’t a possession; it’s a legacy they must take care of for future generations.
Business families who successfully negotiate conflict surrounding family wealth are able to do so because they have adopted a special perspective about what they own. These thriving multi-generational business families live by a principle that their enterprise is not a personal possession but rather a trust that has been given to them for safekeeping and for which they have great respect.
These successful business owners don’t view themselves as enjoying the privilege of proprietorship of their businesses; they recognise that their family is entrusted with the responsibility of stewardship.
Of course, members of these families occasionally have their differences. But even though they may argue at times, their sense of stewardship brings them back to centre – back to unity of focus and effort. It tempers proprietary interest, which typically revolves around viewpoints of “What’s in it for me?” or “It’s mine, and I can do what I want with it.”
Stewardship-orientated families appreciate their business as a gift – not one they feel they deserve or that they’re entitled to, but a family heirloom and legacy that they accept and treasure with respect and gratitude. They share a sense of attachment to, and personal investment in, the company’s purpose and values. Their allegiance and loyalty are to the business itself more than to the individual company managers. In other words, these families know why the business is worth all their trouble, and their answers are bigger than their individual proprietary interests.
When Bernard Puech, now a sixth-generation owner of the US18-million Hermès company, accepted the prestigious Family Business Award from the International Institute of Management Development, he told the audience of more than 200 family business owners, “We in the fifth generation do not view ourselves as owners of the company; we are merely taking care of it for our children.” This compelling statement exemplifies the sense of sacred trust shared by business families who have developed a stewardship paradigm.
Paradigms encompass our prejudices, values, beliefs and perspectives learned from our experiences over the years. These paradigms filter our view of the world and inevitably shape our behaviour. Although no two families in business have exactly the same ownership paradigm, their actions and attitudes reflect some combination of the stewardship and proprietorship orientations.
THE PROPRIETORSHIP PARADIGM
Family members who approach ownership primarily from a proprietorship orientation view their business as a possession that they are entitled to exploit and consume. The proprietorship orientation can easily fuel conflict as family members vie with each other to the use the business for their own purposes. In some business families, greed and a self-serving attitude masquerade as claims of rightful reward and return on investment.
Conflict occurs when interests clash; self-defence inevitably emerges when parties are polarised and win-lose patterns are established. Business owners with a proprietorship orientation hold beliefs like the following:
Business ownership is my right, and I am entitled to the benefits.
My business exists for my best interests, and I expect it to adjust to my needs.
Every day brings a new threat by those wanting to destroy what I have built and worked hard for. I will at all costs protect my rights.
I intend to take as much as I can out of this business.
THE STEWARDSHIP PARADIGM
Families who emphasis stewardship view their business very differently: as a trust to be guarded, preserved and nurtured. Promoting the welfare of the business as a whole, above the special interests of the individuals, is considered to be a primary obligation of ownership. These families relate to each other and their businesses in a spirit of gratitude for their perceived abundance as opposed to a sense of entitlement. There is a sincere and workable balance between self-interest and the common good. Behaviours and interactions are characterised by trust, confidence and optimism, respect and affirmation, sharing and openness, and a sense of well-being.
The stewardship orientation nurtures attitudes and actions that will help business-owning families bridge differences and re-negotiate expectations. While they may differ about what to do or when and how to do it, the stewardship orientation will bring them back to centre and enable them to recognise the purpose and mission behind their decisions and actions.
The most significant force in managing conflicts is the family’s reliance on a strong, genuine and long-standing stewardship paradigm. Families who successfully deal with conflict tend to hold the following perspectives and values:
They treat the business as an opportunity that has been entrusted to them and consider it their mission to ensure its well-being.
They take to heart their commitment to long-term success, going beyond mere lip service, offering quality products and services versus cutting corners to make a fast buck, and attending to the real wants and needs of their customers versus selling them short.
They feel a genuine sense of love, loyalty and caring toward the family as a whole and toward each other individually.
They live their lives with a spirit of gratitude and a sense of abundance as opposed to entitlement and scarcity.
They recognise they are not islands unto themselves; when appropriate, they ask for outside help.
They recognise the importance of being a “relationship-first” family business. they send time, money and energy on opening up communication, developing a process for sharing information, building consensus, analysing and solving problems, and creating policies and procedures that keep family and non-family employees working together. In short, they understand that relationships are the “language of family business” and sincerely assess them as they measure success.
THE PRINCIPLE OF STEWARDSHIP
An attitude toward ownership, we have found stewardship to the most important value in families who are successful in passing businesses from one generation to the next. To be a good steward is to take personal responsibility for leaving resources better than they were when they came into your care. Stewardship springs from the ancient idea that the wise management and passing on of property and privilege is an honourable role that brings meaning and pride to the steward. An entrepreneur or owner who values stewardship believes it is his or her duty, responsibility and privilege to pass the business on to others, for them to build and serve in similar fashion, creating a process of multi-generational continual improvement and progress.
This central principle of stewardship explains more about the success of family business than any other single value. Business leaders who see themselves as proprietors will at some point, when they have all, they need or want, have no reason to continue growing the business, taking risks, looking for opportunities. In contrast, business leaders who value stewardship are truly committed to the perpetual growth of the business. They are motivated to continue to take risks, looking for opportunities and working extra hard, and they continually find meaning in doing so.
Business owners who embrace stewardship are motivated to submit to the difficult process of succession. Stewardship encourages them to prepare a successor or successors. It helps them over the hurdle of giving up power in the business. it helps them take the difficult step of relinquishing control over the family. And it helps them teach younger family members to lead the way. An attitude of stewardship empowers business owners as parents, too. Families that believe in proprietorship risk creating a sense of entitlement in their children, because the perspective children see at work is a self-centred one. Families who believe in stewardship have an opportunity to pass on a more generous, future-directed perspective. This equips the children of successful, wealthy business families to cope better with inherited wealth and privilege.
Family Legacies www.family-legacies.com is a multidisciplinary family business consulting company. Our consultants are leaders in their respective fields including; Family Business Consulting, Strategic Planning, Financial Planning, Wealth & Risk Management, Corporate Finance, Business Transitions & Exit Planning - Buy, Improve, Grow & Sell Businesses, Commercial & Family Law, Executive Coaching, Leadership Development & Facilitation, providing our clients with a professional and integrated multi-disciplinary service.