For a family-owned business nothing is more important to an organisation than the nurturing and protection of its reputation. Having a family enterprise is not only a privilege – it’s also a huge responsibility. Unlike many boards of publicly owned entities, due to their personal connection, families have additional emotional investment in their business. They are in it for the long haul to create a legacy for their family. Custodians of valuable assets that provide for their family, and like all assets, its value needs protection. Carl Courtney shares his thoughts.
According to the Institute for Family Business there are 4.8m family-owned enterprises in the UK which comprise 85% of all private enterprises. In the most recent figures from 2017, they collectively generated 28% of the UK GDP, amounting to a staggering £18.8 trillion a year. The message is clear – collectively, family-owned entities are big business.
Family Firms Protect Their Corporate Reputation
Generally speaking, family-owned firms tend to be more careful with their corporate reputation. After all, it’s more than just a business for them. It’s a reflection of their family and represents their place in the world. Successful family firms have the capacity to deliver an ongoing stream of revenue, and in some instances, significant wealth. Family owners see the value in the reputational insurance good Crisis Management brings to the table. Marsh Consulting hits the nail on the head, stating, “A dollar invested in Crisis Management returns $7 in averted costs."
Investing In Privacy
In my early twenties, when I had just launched my own PR firm, I was introduced to an enormously wealthy entrepreneur of a highly respected, but little-known family business. I pitched to him in his ‘office’ – an entire floor of an office block with only him and his office furniture occupying the space (a surreal sight indeed). I presented all the great ideas I had for getting him and his enterprises a high media profile, and how this would translate into further growth for him.
He listened intently, and once I finished, he said he would be very happy to work with me, but my goal was to ensure he was never, ever featured in the media. His resolve was to invest in my services to keep his and his companies’ profiles as low as possible. Unbeknownst to me at the time, this was my first ‘Crisis’ client.
Whilst nothing had gone wrong in his business, this hugely successful businessman placed a high value on investing in professional help to protect his reputation, and the reputations of his companies too. By reverse engineering everything I knew about publicity and learning the long-held sound principles of Risk and Crisis Management, I started on the journey of becoming a crisis management expert.
Over the years I have worked for dozens of family-owned businesses (some for decades), putting in place systems and a knowledge set that protects the ‘family silver’ and allows them to sleep better at night.
Five lessons From Family Business Crisis Management
1. Family businesses have a different, often more patient, perspective. They are more inclined to invest for the long term. This explains their tendencies towards having a crisis advisor – it’s a way of protecting their reputation in the long term.
2. “Experience is the name everyone gives to their mistakes.” – Oscar Wilde
When young family members join the business, they usually learn the ropes from the bottom up. This learning period can result in teething problems that make for a good story. The better known the business, the more interested the media is. Contingency planning and the risk register need to reflect this, accordingly.
3. “You need people who can tell you what you don’t want to hear.” – Robert De Niro
The term ‘family’ can be synonymous with fear. Non-family employees may have a predisposition to protect the family from bad news. However, this can be catastrophic if a crisis is emerging and available ‘time’ is everything. Training needs to be put in place to circumvent this avoidant, nervous behaviour. Making it clear that the messenger won’t be shot.
4. Trust and loyalty are often the drivers in a family business. Everyone in, or advising, a family business can be seen as an outsider if they’re not family. Trust has to be earned fast to be effective and loyalty is reciprocated. Families value longevity in a relationship and tend to hold onto their advisors once trust has been established.
5. Legacy is hugely important in family businesses. When the time comes to retire, accuracy of media profiles is important. This work needs to be done behind the scenes, and in advance too. Equally, when death occurs, accurate obituaries are non-negotiable. As with dealing with retirement, this sensitive work needs to be written and approved by the family. It bears to remember that age is not a factor here, either. However young the protagonists are, accidents and sudden ill health are, unfortunately, facts of life. Having this aspect of a family’s reputation managed by external specialist counsel is the most expedient method of successfully achieving this.
Trusted Advisers Look After Secrets
It’s true, family-owned businesses tend to be secretive. Unless their business is listed on the stock market, there’s no need to divulge too much. But being a trusted advisor and crisis counsel means we have to get under the skin of the business to be truly effective.
In my experience, once you have proved yourself and deliver what you promise, you will likely forge a long-term relationship and become the sounding board for all sorts of situations. After a long-spanning career in crisis, I’m a bearer of many, many secrets!