Posts Tagged ‘structure’

Why Conflict In A Family Business Is Bad For Strategy

Tuesday, July 23rd, 2013

We’ve worked in a lot of family businesses over the past 12 years.The negative impacts of confrontation and infighting on strategy

During that time we’ve had assignments disrupted, even brought to a premature end by family conflict.

I’ve seen family members say, and do, some terrible things to each other.

It’s not as if it’s a new experience. I saw some ugly political games in the 25 years I spent climbing the corporate ladder.

Confrontation and infighting are bad for any business. Their impact on the strategy, however brilliant and well executed, can be enormous.

There’s a difference though. In a family business, the damage isn’t just to the company.

The unpleasantness spills over into private lives, and relationships that should be close – parents and children, brothers and sisters – are shattered. And sometimes they remain unrepaired until it’s too late, because one of the parties dies.

I’d realized that the conflict in family firms seemed more intense than the ones I’d seen in my corporate days. But I hadn’t realized why until a blog post I read recently made it clear.

Corporations have barriers that prevent conflict becoming too ugly. Rules, processes and structures govern the behavior of every employee, from the lowest to the highest. For example, if a manager talks or behaves inappropriately, he will find himself on the wrong end of disciplinary action initiated by HR.

The same rules exist in many family businesses, but they apply to everyone except the owners.

Why? Family members apply the dynamics from their personal relationships to business situations – even though they know they shouldn’t. For example:

•  When a child becomes an adult and joins the family firm, the parent who raised her remembers her missteps and miscues from childhood and adolescence.

•  Parents try to resolve disputes by forcing everyone to toe the line.

•  Siblings deal with difficult circumstances by withdrawing, avoiding, or undermining each other.

Even if the child has left the family home, the plant or office can become a replacement.

As the owners of the business, the family can ignore the rules or processes. So there is nothing to stop conflict, caused by the ineffective behavior of both generations, blowing the lid off the family’s assumed harmony and threatening the success of the business.

Does this mean that every family business is fated to erupt into a bitter fight? No, of course not.

Some families use their values, long-term orientation to their investment and loyalty to employees and customers to maintain a “professional management” approach to challenges, problems and conflict.   In the other cases, family members can be helped to understand that conflicts can result if there are no formal boundaries on their behavior.

And, in fact, we have been able to help families like these, put greater structure in place. Which enables focus to go back on the execution of the strategy and getting results.

If you want to read the full blog post you can find it here.

 

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Culture Eats Strategy for Breakfast

Thursday, September 15th, 2011

This week’s guest blog post is provided by Kate Erickson.  Kate has over twenty years experience in professional services including organization design consulting, human resources leadership and employment law.  She was the head of HR for Coca-Cola, did the HR start-up for Ontario Power Authority (OPA) , and is currently working with Walmart Canada to effect culture change.

Over the years, the statistics are consistently grim – 70% of change efforts fail and 70% of business strategies are not executed.

Yet we know from John Kotter’s 11-year study of high performing organizations that great corporate culture has a significant impact on a company’s long- term performance, resulting in:

  • 4 times higher revenue
  • 12 times higher stock price and
  • 756 times higher net income

So if culture is so critical to success, why don’t we have it handled?  Here are 5 things that leaders can do now to narrow the cultural divide.

1.  Be honest about what your culture is now.
Arrange for an objective assessment of your culture and be prepared to make the necessary changes.  No matter what your particular Achilles heel is, whether your people lack focus, drive or a commitment to excellence, you can upgrade to a culture of teamwork, accountability and stellar results.

2.  Consciously design your culture
By now, everyone knows the story of Zappos’ meteoric rise.  The company was  chronically losing money until its owner brought on a young entrepreneur, Tony Hsieh, as its CEO.   Within 12 years the business was bought by Amazon for $1.2 billion.  Tony credits this extraordinary success to focusing relentlessly on creating culture as his top priority.  Under Tony’s leadership, nothing went forward unless it supported Zappos’ strong culture of WOWing customers. As a result Shieh’s strategy of year-over-year earnings gains has been successful since 2003 and the Company gives tours so others can learn from its experience.

3.  Treat culture as your North Star
Nordstrom is also well known for its laser beam focus on customer service.  Legend has it that one day a new customer walked into Nordstrom’s shoe department and asked to try on various pairs of shoes in two sizes.  It turns out one of his feet was a full size larger than the other.  When he found the shoes he wanted, he stepped over to the cash and prepared to pay for two pairs of the same shoe, one in each size.  However, the Nordstrom’s salesperson, well trained and empowered to create customer loyalty, made the decision to sell both pairs for the price of one, telling the customer, “It’s not your fault that Nordstrom’s didn’t have a single pair of shoes to fit you.”  At Nordstrom, a culture of accountability for stellar customer service makes it easy for people at all levels of the organization to make the right decisions for the business.

4.  Recognize the importance of social relationships

From the last Ice Age to the current time, humans have survived and prospered because we rely on each other.  Ancient tribes recognized the value of diverse strengths –  hunters, gatherers, toolmakers, medicine men & women – and combined forces for the good of the group as a whole.  Successful organizations today can also structure for powerful collaboration.  A great place to begin is with small groups.  Get them working on projects that have meaning for them and for the business, and add people as it becomes obvious that other strengths and skills are required to achieve more.  In organizations that do this deliberately and well, results jump a factor of 300-500% as employees naturally form well-rounded and collaborative teams.

5.  Measure the Results
Currently, the most widely used people metric is Employee Engagement which measures individual employees’ concerns about their leaders, their compensation, their best friend at work.  Zappos and other top employers whose engagement scores were high, don’t do these surveys anymore because it doesn’t tell them anything they need to know.  As you build a vibrant culture, trying to measure progress through an Engagement survey is like putting a bicycle speedometer on a Ferrari – it quickly becomes irrelevant.  What is important to measure now is the stage of your culture, the quality of work relationships, and the results produced by people working in vibrant collaboration.

These tools and methods are readily available and those who take advantage of them now will have a competitive advantage.

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