Family businesses are the cornerstone of most national economies, according to a recent report by Credit Suisse Research. They can create jobs, spur innovation, and drive superior returns.
However, such success can only be achieved by businesses that maintain good governance, identify and develop both family and non-family talent, pursue disciplined succession, and preserve the family gravity, Harvard Business Review reports.
The latter—family gravity—is often associated with having at least one family member keeping a strong presence in the firm.
To better define this gravity, HBR interviewed more than 50 executives at 28 leading family businesses, distilling its answer into six elements:
1. Families must have a values system, which unites members and provides a common framework for building relationships with the business and the community.
2. A clearly defined vision for the future.
3. Clarity about the level of family involvement in business operations.
4. Demonstrated cohesion through mutual understanding, respect and support, as well as a healthy exchange of ideas and discussion of key and delicate issues. This determines how resilient the family will be and how it will respond to change.
5. Solid family governance, with agreed upon decision-making policies to avoid conflict and keep things professional.
6. Leadership principles and roles must be clearly articulated for all executives of a certain level, whether operating within or outside the company.
Read Harvard Business Review’s full breakdown of these traits, which make up the glue keeping family businesses afloat.