07 Feb For Family Firms Social Responsibility is Fundamental and that Matters right NOW
We all know the old wisdom that in times as precarious as we are living through today you should “stick to fundamentals.” One of the “fundamentals” that is often left out in discussions of business is your firm’s social responsibility. Skeptical? I understand. For years terms like this have been the province of Big Corporate. More friendly terms like “giving back” were what family firms did when times were good and they could afford to do so. All that is different now. If it wasn’t already, your family firm’s social responsibility is now fundamental and the price of ignoring this “fundamental” keeps going up. The moral case is stronger than ever but I am not just talking about that. I am also talking about the business case. Either way, my question is still “what’s the plan?”
Family business leaders in the US are working hard to upgrade strategy and strengthen infrastructure – and more than anything, to secure long-term success and prepare for generational change. One item that cannot be left out of that important process is securing the long-term viability of a family firm’s commitment to its core values. The multiple tragic awakenings of 2020 have spurred increased awareness that social responsibility is not just for corporate America. No matter what their size, family firms often don’t have the tools or the set-up to make the kinds of plans they need in this arena.
Outside stakeholders like municipalities, advocacy groups, investors and partners are bringing new expectations and different language to the table. And perhaps of even more immediate importance, the next generation in the family itself is asking different questions.
What is the carbon footprint of our operation?
Why don’t we have more diverse investors or contractors?
Is there a reason most of the people who work here look like us?
What kind of impact are we having on the society that we are operating in?
Is this an anti-racist organization and do people here even know what that means?
And perhaps the most personal and profound:
If I was born on second or third base and everybody knows it, what can I do when I have a leadership role to demonstrate that I recognize “from those to whom much has been given, much is expected” to quote some biblical wisdom that may be familiar.
Josh Baron and Rob Lachenauer write in the current issue of Harvard Business Review about a set of fundamentals for any family business to ensure its survival. They covered very important elements but did not comment on the relevance of social responsibility to performance or endurance. In fact, how well a family business reflects the family’s values is a potentially important indication of its likely success from generation to generation. Papers like Dennis Jaffe wrote for the Institute for Family Business in 2019 called “Social Impact in Hundred-Year Family Businesses” document just how important cohesive and coherent social impact strategy actually is. How would a family firm go about the process of testing the relevance and durability of its core values and social commitments? Here are three familiar starting points:
- What are the core values of the family and the company?
- What is the vision for the future of the company and how do those values factor into it?
- What are the expectations of stakeholders – family, investors, employees,, customers, regulators and communities ?
Asking these questions is easy.
Answering them is not necessarily hard. But it takes a process; especially when it feels uncomfortable to you. It takes an intentional, guided process and a plan; just like everything else that matters to the business. That process starts with a thoughtful review of the following areas through the lens of social impact and responsibility and in particular through a lens that is pointed at who you want to be and who you need to be as a family firm:
- Key Business Decisions
- Approach to Philanthropy
- Investment Strategy
Not everyone offering to help is seeing it through your eyes. Some who seem sincere cannot help but have their own agenda. You are undoubtedly unsure of what kind of effort is enough and where it can really make a difference that feels useful, authentic, and gratifying for you.
The point is that in 2021, being intentional about social impact and social responsibility is fundamental. We are talking about the essence of what it means to have your name on the door. And maybe the names of your parents and grandparents too. If it is not already, that door will soon be very important to your children and grandchildren. It tells a story to them about who you are and what you value most, other than them of course.
So, absolutely stick to the fundamentals. What’s the plan for making sure your family firm’s social responsibility is one of them?
Andrew Tarsy is Principal of Emblem Strategic LLC. He helps family firms align their values and their vision to achieve lasting impact, distinction and advantage.