Transformational Leaders and Family Businesses
Leaders are defined by their effect on their followers. “Transformational leadership, ” a term used so often that it seems in danger to becoming almost a buzz word in entrepreneurial circles, refers to those leaders who take their followers to the highest level, motivating and inspiring them to play their “A” game, to be “all they can be” to reach individual, group and firm goals. Put simply, transformational leaders are great leaders. Such leaders run the most successful companies, by whatever definition (profits, ROI, retention, longevity) one applies.
While transformational leaders can be found in any field of endeavor – sports, education, government – they are spoken about most often in the context of business, and, according to many recent studies, predominate in family businesses, especially those that have beaten the famous 30% odds and have survived to third and fourth generation “super star” status. I did not grow up in a family business, but my work has afforded many opportunities to speak with – and learn from – leaders of successful family enterprises. My observations may not seem at all surprising to those who had the good fortune to grow up in such environments, but for those who have not, these thoughts may prove of interest.1. To what do you attribute the longevity of the business?Without exception, commitment to purpose upon which the business was founded is the answer. This purpose is expressed in terms of excellence, not dollars. Usually, the owner goes on to recount the history of each generation of leaders and how each led the business through adaptations to challenges – economic, familial, historical (like World Wars) – each generation stepping up to the plate, making sacrifices to perpetuate the legacy, making changes while sticking to core values. Often, owners speak of turning down offers that would have been lucrative for the family but would have constituted “selling out” on family ideals and responsibilities to the other shareholders, employees, customers and community. 2. Core values?When speaking of purpose, these family leaders invariably connect moral values. One owner of a local paint business recited the Four Guiding Principles of the Rotary, which started with his grandfather’s hanging the list on the wall. Another recited by heart the anonymous poem posted on the wall of his garage, which ends with “[t]he customer is not a distraction from our work, but the reason for it.” 3. What about your employees? Much turnover?All spoke highly of their people (rarely referring to them as “employees”). Invariably, each owner had a story to tell about the young man who started out sweeping floors or some such task and was now, decades later, a VP or in a similar position of responsibility and stature. The owners indicated that the firms usually hire from within and seek to assist their people to learn and grow. A daughter of a clothing manufacturer shared that there were often as many as three generations of a family employed in the business at one time, all at different levels.
They describe environments characterized by a lack of formality (no titles, fancy offices, easy access to top management) and efforts to minimize bureaucracy, both contributing to the sense of extended family. One owner of a paint distribution company recently shared an extreme example of this trust between family and employees. “We’ve never had a time clock or a sick leave policy. When someone needs to take time, they do. We trust them and they have never let us down.” He offered as example that when his great grandfather went off to war, and his father was too sick to run the company, the employees ran the company for seven years until the grandfather returned and the son was old enough to take over. Conspicuously lacking from these conversations is mention of profits/revenues. Instead these leaders of strong family firms talk of commitment to purpose (excellence), core values and acting responsibly to all stakeholders. Underlying it all is a passion for the business and the family and a feeling that “to whom much is given, much is expected.” Clearly, there’s a lesson to be learned from those whose family businesses have been successful for so many years. Perhaps it’s as simple as Sam Walton stated it, “We’re all working together. That’s the secret.”
