Organizational Culture: A Blueprint for Success in a Family Business

Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]

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In looking at the organizational culture of a family business, we are assessing behaviors that are important to creating a strong effective staff and competent leadership.

“Successful family businesses tend to have the family’s values and culture deeply embedded into their business strategies, policies and practices,” says leading family business expert Don Schwerzler. “How well the business performs can be directly tied to how well the leadership and the people work together. Having a strong and well defined organizational culture produces high performing businesses.”

Schwerzler has been studying and advising family business entrepreneurs for more than 40 years and the founder of the Atlanta-based Family Business Institute.

Values and Beliefs in Your Organization’s Culture

Values and Beliefs describe a family business’ commitment to its constituencies: customers, shareholders, employees, the community, vendors, etc. Values describe the standards and ideals that a company holds in high regard. They provide a framework for implementing strategic initiatives.

• Values Integration
  • Consistently reinforcing standards in company communication mediums
  • Values are clearly defined
  • Company practices, systems, and processes are carefully aligned with values
  • Values are consistently communicated
  • Employees understand critical importance of standards
  • Carefully considering values during the strategic planning process

• Values Credibility
  • Ensuring values are not compromised
  • No strategy is adopted that might violate company standards
  • Values are reviewed periodically to maintain relevance
  • Ensuring employee day-to-day experiences are consistent with values
  • Confronting behaviors that violate values and standards
  • Cynicism is virtually absent

Leadership

In the organizational culture, leadership deals with creating a clearly articulated vision and possessing the skills and the resolve to recruit and develop followers who are committed to carrying out the vision. Having the ability to see the bigger picture and maintaining a balance between high-level strategies and front-line tactics.

Different leadership styles are available depending upon concern for profit or concern for production. An imbalance in the concerns tends to sway the leader to a less effective style. Click here to see the grid of leadership styles.

• Management Modeling
  • Management “walks-the-talk”
  • Managers are viewed as role models
  • Management styles are aligned with values and consistent across division/ departments
  • High level of confidence in senior leadership
  • Senior managers are viewed as honest and ethical

• Strategic / Tactical Balance
  • Tactical and strategic skills among managers are equally emphasized
  • Line managers understand the “big picture”
  • Managers understand the broader implications of their decisions
  • Managers can effectively communicate the company’s strategic plan to their staff

• Empowerment in Organizational Culture
  • Balancing authority and control
  • Encouraging employee involvement
  • Decisions made without unnecessary or authoritarian approval process
  • Decisions driven to the lowest appropriate levels

• Developmental Coaching
  • Delegation is a motivational tool
  • Managers consider employee’s self-esteem during coaching/ counseling
  • Managers take the time to recognize a job well done
  • Managers encourage initiative
  • Coaching is viewed as developmental vs. punitive
  • Employee goals/ aspirations are taken into consideration

• Building Effective Teams
  • Managers promote teamwork
  • Team participants are excited about and committed to their goals and objectives
  • Cross-functional communication is promoted
  • Meetings are well planned and highly participative

Human Resource Systems and Your Organizational Culture

Human Resource Systems within the organization’s culture define how a company recruits, trains, challenges, and inspires its employees in the pursuit of its strategic intent.

• Selective Recruitment
  • Considering only high-caliber candidates
  • Evaluating candidate compatibility with company culture
  • Interviewing skills are a company strength
  • Obtaining boss and peer input for critical hires
  • Evaluating managers on their ability to recruit top talent

• Employee Orientation
  • Providing a comprehensive orientation program
  • Emphasizing values and beliefs
  • Senior managers participate in the process

• Does Your Organizational Culture Encourage Continuous Learning?
  • Training is a company priority
  • Providing employees with the necessary training to perform at optimum levels
  • Training programs have a positive impact on organizational performance
  • Aligning training programs with strategic goals
  • Training programs are well designed and structured
  • Spending a strategically proportionate amount of money on training
  • Carefully designing a succession plan

• Performance Management
  • Performance management system is results-oriented
  • Ensuring mutually agreed upon goals
  • Accountabilities and timeliness are clear
  • Interim performance reviews are standard practice
  • Performance evaluations are comprehensive and substantiated

• Reward systems
  • Rewarding appropriate skills and behaviors
  • Rewards are fair and equitable
  • Rewards are worth the effort
  • Promotions are deserved
  • Rewarding team performance greater than or equal to individual performance

Organization Character is Part of Your Organization’s Culture

Organization Character is an aspect of organizational culture that refers to the “behind the scenes personality” of a company. These are the explicit or implicit protocols that soon become apparent to all employees. It takes into account how an individual’s perception of his or her company is shaped to a large extent by day-to-day experiences.

• Informal Communication – Part of Your Organizational Culture?
  • Open exchange of ideas without fear of reprisal
  • Using conflict or disagreement constructively
  • Establishing an “open-door” policy
  • Balance of technology and face-to-face communication

• Organization Feedback
  • Establishing methods for internal feedback
  • Recognizing the value of employee input
  • Encouraging employees to offer their ideas and opinions
  • Communicating the results of the feedback

• Adaptability to Change Vital to Organizational Culture
  • Company is proficient at change management
  • Ensuring that all employees understand the reasons for the change
  • Ensuring that all employees understand the process and methods that will be used to implement the change
  • Employees expect change
  • Ability to respond and adapt to change

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