The core elements of an effective family business
There are three core elements of an effective family business: honesty, fairness and transparency. These qualities are key to the longevity of an effective family business.
How these traits are recorded and communicated down the line is not only important but necessary. It’s easy … and it’s called a Family Charter.
Honesty among family members is critical. The family business needs an embracing culture where family members can freely express opinions and raise difficult issues.
A resilient family business enables challenging conversations to be had so that resolutions can be found.
If people are ‘playing nice’ or ‘saving face’, the real issues are never addressed … the ‘elephant in the room’ is never talked about.
Equally, all decisions and resolutions must be fair. Fairness is not something that exists external to the family unit, it’s something that is negotiated between family members.
What may be ‘fair’ to one person may not be fair to another. And your family members will know if something isn’t fair and the issue will continue to be a challenge until it’s resolved.
Finally, transparency is critical – otherwise people feel like things are hidden. In short, if there isn’t real transparency, a culture of paranoia and resentment can quickly develop.
Your family members will embark on conspiracy theories that very quickly take on the veneer of reality which creates more arguments and disagreements.
Establishing a Family Charter is a way of laying all your cards on the table. And because writing one involves every member of the family business, it leaves no stone unturned.