Seven Secrets of Family-Owned Firms
The following are seven management secrets from family-owned firms to bolster sales and drive CSR success, as adapted from research insights Family Firms Teach Long-Term Survival and Family Owned Firms Pollute Less.
Family firms have stronger relationships with customers, suppliers and community partners than their publicly-traded counterparts. As CSR activities become increasingly important to your company, you may want to take a page from their book.
The following are seven management secrets from family-owned firms to bolster sales and drive CSR success, as adapted from research insights Family Firms Teach Long-Term Survival and Family Owned Firms Pollute Less:
Think long-term – Family firms focus on ensuring their business is a success for future generations. They view customers, employees and shareholders as keys to this success. Your firm can secure longevity by continuously engaging stakeholders in meaningful CSR activities, such as rewarding employees for environmental achievements and participating in community fundraisers.
Focus your efforts – Sometimes, narrowing the scope of your philanthropy is better than trying to do it all. Family firms are successful when they focus on fewer environmental and social initiatives that align with the family’s values and matter to stakeholders. When deciding what corporate initiatives to undertake, choose quality over quantity to make CSR activities more meaningful
Be true to your roots – Family firms have stronger relationships with their local communities than publicly-owned firms. Build positive civic and employee rapport by giving back to the community in which you operate, perhaps by creating a charity to support a local cause.
Stand by your brand – Reputation is of utmost importance to family-owned firms, often stemming from an underlying sense of identity and company pride. These firms are generally better able to enforce environmental and social policies than publicly-traded firms; in response to environmental issues, non-family companies are more concerned with bottom line performance and employment risk than intangible rewards like public opinion. Recognize the value of fostering a positive reputation and envision sustainability as a means of protecting brand integrity.
Rethink ownership – Family firms whose executives own stock often make more socially responsible decisions. In one study, publicly traded companies with CEOs as stockholders polluted more than family firms with a vested interest in the company’s future. Reevaluate what it means to be a shareholder of your firm and assume more of a moderate attitude to environmental decision-making.
Look beyond the bottom line – Firms owned by families who built the company from the ground up are not solely concerned about economic factors. Adopt a triple-bottom-line approach and start balancing social and environmental considerations with financial ones.
Beware your critics – When business goes awry, senior managers at family firms are easier targets for customer anger than the face-less executives at publicly-traded companies. While this isn't necessarily a secret to success, it does provide a cautionary tale for managers. Be good to your stakeholders and repair relationships with local community members to prove you appreciate their loyalty.
With CSR, lip service won't suffice. Family-owned firms possess a grassroots sincerity to environmental and social issues that garner stakeholder attention and trust. Your company can mimic these firms by adopting a triple bottom line approach and embedding sustainability in long-term corporate goals.