In this video, Eric Flamholtz introduces the six key areas where families must define their values. Learn what six key areas that makeup your family business culture.
- Before we tackle how to create a family business plan, we need to spend time talking about your family values. All businesses need a set of core values. Values specify what's important to the business, they establish the norms that indicate how people ought to behave. Additionally, my research has shown that values and culture have a significant impact on the bottom line. What's the moral of the story? To find your values and you'll increase your chances of success.
In your family business, finding agreement on family values is even more important than in a non-family business because of the potential for conflict among family members. There are six key areas where values must be defined. They are treatment of family members, treatment of nonfamily members, expectations of performance and accountability for family and nonfamily, rewards and recognition for family and nonfamily, openness to innovation and change, and finally, leadership.
These six key areas comprised we can term the family business culture. We can assess how well a family is doing in each area, from healthy to dysfunctional and finally to toxic. Remember, 84% of family businesses do not make it successfully to the third generation and I'm convinced that the root cause of this is their inability to handle these six key family dynamics challenges. So let's examine each of these six areas of family dynamics and some possible values for each.
- How to resolve unique family business challenges
- Setting performance and accountability expectations
- Handling rewards and recognition
- Developing the family business plan
- Creating values for a family business
- Defining the mission and vision
- Creating family objectives