How Defining Values Supports the Business Family

The scenario is so common: The X family is at a crossroads. After a generation owning a hugely successful business, the six members of the second generation are growing in their own way. Two of them work for the business, and one other sibling manages the family’s growing real estate holdings. The other two are professionals who are raising their own families. Questions emerge—do we all want to continue to own this business? What do we want to do together? In what way are we a family, rather than a group of related households with a few shared investments?

At this juncture, many families find ways to divide their wealth and allow each household to go their own way. But others pause and wonder, what will be lost if we stop being partners? Can we do more good together than on our own?

Taking time to reflect on those questions can help business families find powerful reasons to stick together. It can help them understand and appreciate what they’ve accomplished together while still opening opportunities both as individuals and together. Here’s what a healthy process to reexamine that question looks like.

Celebrating who we are.

First, a family can step back and look at their legacy—not only as a profitable wealth-generating business, but a reputation for giving to the community. They also like spending time together and feel a connection to the legacy that they want to build upon. They know that as a family they are more than just a business, but what exactly does that mean? They want their children not only to know each other, but to do things together. They are also concerned that as their numbers grow, they are starting to diverge. Some spouses and young adult family members have different priorities and values than their parents. Will the conflicts fester, or can they be overcome?

Every business family entering the 2nd or 3rd generation must decide whether they want to remain a family of business partners, and if so, what that means and how to do it. A productive way to begin is to consider their shared values as a family. What is the purpose of their wealth; how do they want to use it and what impact do they want to have? These are values issues, not business ones. With their diverging personal values, do they share a foundation inspiring enough to build a lifetime partnership? With the wealth their family has created, are there things they want to do together and a common identity they want to express together?

Many families start this process by creating a statement of shared values—what they stand for and what is most meaningful to them. Their values offer meaning, a shared foundation for what they stand for together. This happens when the older and younger generations of a family begin a conversation about what they want to do together. With all their differences do they have enough in common to continue together with the same intensity and collective focus as before?

Defining values.

What do we mean by family values? A value is defined by Webster’s dictionary as “principle, standard or quality considered inherently worthwhile or desirable.” The root for value is valor, which means strength. Values are deeply held and often maintain consistently throughout your life. They form the direction and guidelines for day-to-day behavior. Values help organize our lives. They help us stay on track during change and turbulence. Aligned values are a source of strength, because they give you the power to focus your choices and act more effectively upon them.

Milton Rokeach, the first researcher to define and categorize values and how they organize our behavior, noted:

Once a value is internalized it becomes, consciously or unconsciously, a standard or criterion for guiding action, for developing and maintaining attitudes toward relevant objects and situations, for justifying one’s own and others’ actions and attitudes, for morally judging self and others and for comparing oneself with others. (1)

Values define and express our shared purposes as a human community. Values are the basis for identity and community cohesion. We are part of multiple communities—family, work, religious and civic organizations, and nations—each of which are defined by their values. As a family, we value caring for each other, helping each individual grow and thrive, and doing things that make us close and deeply engaged with each other.

While values are for the long-term, they are not inflexible. In fact, values evolve. A family must connect several types of values:

• First, there are legacy values, values held by the wealth creators–the matriarchs and patriarchs whose success preceded them. These form the foundation for the family that they hold with reverence.
• Then, each individual and household has personal values that guide their lives. Each person’s values are special, and they want to be part of a family that respects the values that are most important to them. Can they find a common core of purpose and enough shared values to continue?
• From the personal and legacy values, the family selects operating values they share and defines what they mean for them together and what they stand for. These often are linked to goals that individuals cannot achieve on their own, opportunities they can pursue together.
• And finally, there are emerging aspirational values, that they would like to express together, aspirations that inspire them to build something for future generations. These form their values and vision.

So, while legacy values form a foundation, defining shared values allows each person to contribute beyond the business, and create a shared entity they voluntarily want to join.

The extended family forms a community that offers more than just overseeing their family enterprise, it has a reality and set of practices all its own. That is why, in addition to defining values and purpose for a family business, a rising generation of family members needs to also define values and purpose as a shared family. Being part of this shared reality may not be for everyone, so families that stay connected over generation almost inevitably have some family members that no longer want to be part of a shared project or entity.

How does a business family go about defining their values and purpose? They can begin in several ways. They can meet as a family and affirm and celebrate the values of the elders, and then add other values from rising generation family members. These family meetings can be very moving and emotional, as family members learn their history and look to the future. They are not without controversy, as some shared values are hard to define or are viewed differently as they are considered. Each value must be defined and talked about. The resulting values statement may go through several drafts and include explanations and aspirations for what it means.

A model family values statement.

Here is an example of a family values statement, that includes explanations of what each value means for the family:

Family: A place of unconditional love where individuals develop and grow with the support, assistance, and a foundation for others in the family unit. Fun times, personal connections, tough times, joy, happiness, crisis – full of emotional presence. Honest communication. Lift and build. Constructive and instructional direction/redirection given to individuals and to the family. Recognize the importance of the individual within the family.

Work Ethic: Always give your best in action, words, and service. Be known as the one who shines, can be open in communication, has a smile on one’s face through the good and challenging times. Reliable, punctual, prepared, education.

Integrity: Foster, cultivate and teach to family generations that this is earned – not simply given.

Balance: Hobbies, activities, family, friends, spouse & children – time set aside. Self-Improvement aside from work and the family. Physical, Emotional & Spiritual balance. Service – community, church, organizations. Philanthropy. Education. Teaching & Learning.

Engaged: By being engaged in anything that we choose to do, we are attempting to give it our best in every way. We recognize that when things go right or wrong, we lean into the discomfort and feel it. We take it all in, try to digest it; then, we meet together, and react in a connected manner.

Defining core purpose.

Once a family has considered its values, they can connect them to define their core purpose. This process should involve deep conversation not just about business, but about how a business family defines who they are, and what else they want to become over the next generations. It is not just about their wealth, but about what they want to do together, what they want to build. Can they build a common family culture beyond their family business that will inspire and motivate them to do things together?

Defining your purpose should not just be limited to the business family. The extended family, too, needs that clarity. As new members marry into the family, and siblings grow up to form their own households, the family needs to renew and redefine who they are. Why are we together? This begins when the new extended family defines a core purpose and values for themselves.

Here’s what one family’s purpose statement looks like:

We recognize that working together as a family to sustain our family and develop our business over generations is a difficult challenge. We all must work hard to communicate, support, and respect each other, and work as a family team. To do this, we make clear and explicit the shared values we aspire to, and our Code of Conduct–how we communicate, support each other, and learn together, to support those values. We realize we are not perfect, and we are all working towards these in our lives. We need to be humble and help each other move forward.

Once a family has established – and captured – its values and purpose, it can use that foundation to create policies and an agenda for what they will do together. Inheriting a share of ownership or family wealth is not an end in itself. We find that business families can add another opportunity as they cross generations: deciding if they want to remain together as a community. As a new generation emerges, with siblings becoming adults, new people marrying in, and growing children, the business family must decide if their shared wealth is enough for them to form a community around. Their wealth provides an opportunity to undertake shared activities—sharing assets, learning, and growing, having meaningful time together, servicing the community. The gift of a business leads the family to have a special opportunity to do things together. The best business families understand the importance of defining (and refining) their values and shared purpose.

(1) Rokeach, Milton (1968). A Theory of organization and change within value-attitude systems. Journal of Social Issues, 24 (1), p. 16. Also see The Nature of Human Values. Free Press 1973.