The DNA of Family Business - Part II

April 23, 2017

This is the second in a two-part blog that addresses how family businesses tend to acheive higher levels of engagement and how non-family companies can do the same. 

This blog is coauthored with Jan van der Hoop; Partner and co-founder of Fit First Technologies; a specialist supplier of tools to enable predetermined recruitment screening. Jan has experience across multiple industries as a senior HR practitioner in several major companies. 

In our last article we talked about family businesses and how critical recruitment was if an enterprise's DNA was to be retained. We talked about the danger of culture becoming diluted as the business grew or spread geographically, and the invisible drag on performance that this can create.

Perpetuating the defining core attributes of a family enterprise as it grows requires discipline coupled with 'guided evolution' for others values as needed!

The component most often overlooked is 'culture' which cannot be mandated or imposed. Telling an employee that 'we expect you to love our customers' isn't going to make it so. Culture is the reflection of the attitudes, standards, beliefs and values of all the people who form an enterprise. It therefore becomes imperative to screen all new employees for values that align.

Company dynamics fundamentally change at about 150 people. Facebook's Chief Product Officer Chris Cox said that "....weird stuff started to happen and the company needed more structured communication and decision-making." Flat management structures with limited hierarchy and consensus-based decision-making cease to be effective. Staff became stalled because it is unclear who makes decisions.  Employees want more feedback and development than managers have the time to provide.

Robin Dunbar theorized that humans can only really maintain up to 150 personalized relationships.  The so-called Dunbar number is the size of military companies. Keeping things below 150 means you can manage by peer pressure, and avoid hierarchy or policemen. Above and they cease to be a cohesive, culture-reinforcing unit.

When "we can't hear you" is the response to a Town Hall meeting, it is time to start rethinking communications. This is about the time when company culture becomes less about tribe and more about the customers the tribe serves. Leaders need to focus more on business context rather than rules, what's working and what's not to enable staff to continue to define solutions. For example Netflix, abandoned the tracking of vacation days and their entertainment and travel policy became "act in the Company's best interest."

Gore & Associates, a private manufacturer has over 10,000 employees but factories do not exceed 150 employees because bigger than that and "we decided" became "they decided". 150 people can all know each other and feel confident in committing to group goals and values.

Time spent talking with staff about objectives and with new employees about the company history will perpetuate and influence culture in the same way that the "tribe" cultivated it at an earlier stage. The objective is to add structure without crimping creativity, speed, and the empowerment that were responsible for past success.

People with exactly the right cultural values will be scarce as will those who come close and can be coached. Senior-level hires are even more difficult; we become set in our ways as we age and might hear the coaching and even appreciate it but won't adopt the modified behaviors.

Organizations that are growing need to be really good at identifying people with the right standards, attitudes and values early in their career, before views solidify. They need to be intentional about how they teach, guide and coach these recruits into fitting more snuggly into the culture.

Employers cannot rely on being able to shop externally and must aim to get really good at growing their own.
Like any successful sports team a good academy will help. Hire the right DNA into every position then invest in growing and developing a cadre of leaders who will perpetuate the founding culture.

Managers will need 'slack' in their day to observe, coach and develop their people - they can't be 'doing' all day long - and clear accountability for development needs to lay with with both manager and individual employees.

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