Graham Yemm works with organisations on a range of training and development issues, including leadership, culture and communication skills. For more information visit www.solutions4training.com
The success of a business depends on the quality of leadership throughout, but especially from the top. Good management disciplines and skills ensure the business is run effectively but they are not enough on their own. Graham Yemm looks at the top job requirements
One simple but profound truth is emerging from the world's most successful organisations: directing or leading an organisation is different to managing one. It is no longer sufficient to take specialist managerial skills into the boardroom. So, what is the difference?
Leadership is the development of vision and direction, setting a course that gives a sense of common purpose. Leadership is about inspiring, involving, persuading and motivating people to follow the cause and achieve the vision. Management is about getting things done. It requires co-ordination of resources to achieve a defined end result with and through people. It is the science of continuous improvement. As Warren Bennis says in his book, On Becoming a Leader, "Managers operate within the culture" and "leaders create the culture".
Over the years, there have been many really good examples of successful family-run businesses and certain national and regional cultures seem to include more than others. Asian families have created many successful enterprises, both in their own countries and their adopted countries. Within the Middle East and Turkey, I have worked with a number of dynastic, family-owned organisations, from conglomerates to mid-sized operations. They are often strongly hierarchical, which has worked within local culture, but may need to adapt this characteristic in the next few years. Historically, Europe and the UK have had their own success stories, through the Industrial Revolution and Victorian times. There are many companies still operating today that owe their existence to the beliefs and drive of the early industrialists who were often very philanthropic and paternalistic. Some of these were enlightened enough to move with the times, others faded as they failed to adapt to different expectations from both customers and staff.
The key challenges for family businesses are: managing the family dynamic and relationship; managing and leading the business successfully; and managing the relationship with the people working in the business. There is also the challenge of managing the business through change, whether it be succession or a change in direction for the company.
When it comes to managing and leading the business there is, in many cases, a lack of investment in developing the people at the top – particularly in leadership skills. The leaders of the business have to create the vision and mission, identify and define the values of the organisation. These need to become part of the fabric of the organisation – and the family have to 'walk the talk' to demonstrate their integrity and commitment to them. Out of this comes the culture – and strength of culture will often dictate success of business performance. (One of my main areas of work at present is with organisations, helping them to measure the culture and to implement the specific actions to enhance it.) I can think of one UK family-run business which acquired several other companies in a short space of time, looked to reduce headcount in the new operations and expected a salary cut from the remaining employees. The fact that the directors were not cutting their own salaries did not help to instil a sense of integrity with their employees.
Businesses face a challenge of growth, at whatever level. The executives need to provide the strategic direction and have a plan to achieve it. This strategy needs to be aligned with the family desires and vision. They also need to recognise the strengths and limitations among the people running the business, ensuring any senior staff outside the family are given equal weight for their input. If you have gaps, consider using support from outside the family. This could come from further down the organisation or externally.
The challenge for successful family-run businesses is to recognise when they need to bring in support from outside the family. Furthermore, they should adapt their leadership style and approach as they move into positions of more responsibility. They have to let go of more of the detail and day-to-day operational issues and move to providing the strategic direction. They need to learn to lead through others.
One of the issues I see with some family-owned organisations is the frustrations of those who are not part of the family. They feel as though their prospects for growth and development are limited, that other family members will be brought in over them or fast-tracked ahead of them, or that they cannot influence their bosses. There comes a time when these frustrations can become seriously demotivating. The leaders need to recognise this and learn to reduce or prevent it. If there is no chance for non-family employees to make it to the top of your organisation, there will be a limit to just how much even the brightest, most ambitious person will contribute. Your relationship with the people who work for you are the key to achieving your strategy and both business and personal aims. Look at how well you communicate with the workforce. Is it open? Are people encouraged to approach the 'bosses' with ideas, concerns or complaints? Do the same standards of performance apply to everyone? Are people promoted on merit rather than family tree? Do you have a good performance appraisal or review process to keep communication flowing?
Remember, you do not have a divine right to respect as a leader – rather, it is earned. And in my experience, the old adage of "do unto others as you would have them do to you" holds true.
Businesses usually need to adapt to change, either proactively or reactively. This is a challenge in most organisations, regardless of ownership but, frequently, family businesses do not tackle change proactively. They often want to preserve the status quo or follow the plan already in place. They need to look at what is happening in the market, both the threats and opportunities. They need to convince the other family members of the change programme an then there are the 'usual' change management and change implementation challenges which face any manager or leader.
Family businesses face the same challenges for their leadership as any other organisation, privately or publicly owned. They need good, strong leadership. Their situation is different because of the additional dynamics within the family and workforce which require extra skills to handle effectively.
Those of you running family businesses need to continually develop your own abilities as leaders, strategic thinkers and directors. Work on your communication and influencing skills so those working alongside you retain your vision and strategy to drive the business forward.