Transforming culture to keep up with the rate of societal and technological change continues to be a battle for all forms of business. A recent McKinsey & Company article described five bold moves leaders can take to transform their culture to meet the demands of modern workers. As usual, McKinsey uses their extensive proprietary dataset to inform their recommendations. The missing piece for success in a family business is the need to account for their unique dynamics from the perspectives of opportunities and challenges for implementation. Consider the following:
Challenges and Opportunities for Family Businesses Applying the 5 Bold Moves
Don’t Just Tell—Show – actions must follow words and people must be open to learning.
Challenge: Family businesses often have deeply rooted traditions and long-standing ways of doing things, making it difficult to introduce new practices. People follow what you do, not what you say. Changing family dynamics to accommodate change in the business is far easier when the relationships are constructive, supportive, and cohesive. When the opposite is true, while it is very difficult to succeed in applying this bold move it is not impossible for leaders willing to change themselves first.
Opportunity: Family members who work in the business must be the leaders of change. Those family members with the greatest positional authority who also focus on building influence and relationships with family and non-family leaders foster environments that are open to learning and change. These leaders tend to have higher emotional intelligence and greater ability to reflect on the rituals and practices that need to change while preserving those that contribute to success. This awareness allows them to navigate the emotional mine fields of change that are unique to the family business context.
Don’t Assign—Enroll – Mandates for change never work. People must choose the change because they see the benefits and why it matters for them.
Challenge: Generational differences and power dynamics can hinder voluntary enrollment of family members working in the business. Without getting family members on board, employees with struggle with adoption. Common obstacles include, failing to address transgenerational trauma, ego protection, inertia generated by the power structure and family hierarchy, lack of psychological safety, younger members feeling excluded from decision-making processes, pigeon-holing, enabling, and artificial harmony behaviors.
Opportunity: Identify the beliefs and mental models that drive the power structure and points of leverage at the individual and family levels. Use Kurt Lewin’s “Force Field” approach to understand each person’s motives, values, needs, moods, goals, fears, and ideals related to a proposed change. Once individuals have identified their forces for and against the change, explore at the family level. Consider the power structure of the family to determine if those with the greatest power bases (authority, control, and/or influence) are sufficiently aligned with the change to enroll themselves. By involving all generations in the change process, family businesses can foster a sense of ownership and commitment, bridging generational gaps and enhancing collaboration.
Shake It Up—All of It – Don’t let “sacred cows” (rituals, beliefs, or practices that are considered untouchable, immune from criticism and change) hold you back.
Challenge: This issue is exponentially more difficult in family businesses. Challenging long held rituals, beliefs, practices, and power structures present threats to the family’s legacy, identity, coping mechanisms, and its members’ ego, identity, ability to conform socially, and sense of security in the system. These threats foster emotional reactions that present as resistance to change, self-sabotage, acting out, and a host of other counter-productive and/or self-destructive behaviors.
Opportunity: Introducing new rituals and refining roles can help align family values with business goals, creating a more adaptive and resilient organization. The caveat: this will take tremendous courage, emotional intelligence, and family cohesiveness. The starting place is always ensuring the family dynamics are strong enough to navigate the change. Building a leadership coalition in the family that can foster psychological safety, emotionally intelligent change processes, and begin championing a nurturing environment for all family members is critical. Once this step is in place, the family has a much better chance of conquering the challenges that hold them back.
Connect the Dots – Leverage Influence: Relational influence is the most powerful change force in a family business. Work with the influencers, not against them.
Challenge: Family dynamics that negatively influence change, including conflict styles and mental health issues, can complicate communication and feedback mechanisms. When emotion (particularly anger, guilt, and shame) are used by power holders to influence and control others, the opportunity for change is limited, particularly if they also hold positions of authority. Additionally, where these issues are present, they are enabled by the behaviors of other key family members and/or long-term employees.
Opportunity: Families that create cohesive relationships, constructive cultures, compelling visions, and clear strategies connecting an individual’s contributions with something greater themselves build businesses that thrive in times of change. When these attributes are not present, the first step is identifying the points of greatest leverage. For example, maintaining clear behavioral expectations and holding everyone accountable, including those used to wielding emotion to maintain power bases and working with enablers to help them choose different options. Empowering constructive influencers within the family and establishing clear communication channels can enhance trust and ensure that change efforts are effectively communicated and supported.
Remember, It’s Personal – Authenticity Matters: People thrive in environments that allow them to bring their best selves to work. It takes too much energy to fit into a culture that requires behaviors that are inauthentic to core identity.
Challenge: Families are not homogenous, they are composed of people with different personalities, roles, needs, strengths, and weaknesses. In family business, too much pressure to work in the business, conform to rigid social norms, carry the legacy forward often leads to feelings of being trapped and forcing the need to be inauthentic. This is one of the leading causes of family dysfunction that hinders innovation, growth, and change. Family members in these environments have constrained psychological development and often face mental health challenges. Balancing professional and personal relationships within the family can make it difficult to address individual needs and well-being.
Opportunity: Focusing on emotional intelligence and creating a supportive environment can help family members bring their authentic selves to work, improving engagement and productivity. Successful entrepreneurial families tend to have common attributes that allow them to thrive in the face of adversity. When “outsiders” attack, they pull together and fight with the grit and resilience of a highly trained special forces unit to vanquish the enemy. When the enemy is from within – usually entrenched family beliefs, behaviors, and mental health issues – mustering the same grit and resilience is far more difficult and exponentially more critical to the effort. The opportunity here is often external support from a skilled coach, consultant, therapist, or combination of disciplines who can see the system from the outside to help the family navigate the change.
Summary
Deep-rooted traditions, generational differences, and complex family dynamics can hinder the adoption of new practices. However, family businesses can leverage their strengths by having family members lead the change, involving all generations to foster ownership, and introducing new rituals to align family values with business goals. Building a leadership coalition that fosters psychological safety, creating cohesive relationships, and focusing on emotional intelligence can help family members bring their authentic selves to work, improving engagement and productivity.
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