Family business is P2P

We often hear about B2C and B2B business models, but let’s not forget P2P, or the “person to person” model.

Year after year, my interactions with family firms confirm the importance of placing people at the heart of decision making. People should always be the top priority, which applies not only to family business, but to all organizations, whether corporations, political systems or social structures.

People suffer, undergo health problems, confront family issues and navigate job challenges, so we can’t look the other way, fail to listen or refuse to help when they are in need.

A laser-sharp focus on people

In today’s world, hot-button issues like climate change, growing inequality and digitalization should obviously receive attention and resources, but always with a laser-sharp focus on people: their health and wellbeing should be embedded into corporate purpose.

By promoting people’s personal and professional growth, leaders spark a positive chain reaction that spills over into other ambits and helps address these complex global challenges.

In this sense, business executives play an important role: the attention and energy they give to their teams and people produce a powerful multiplier effect on everything else.

This priority is palpable in the realm of family business. As owner families are quick to point out, their people are the motors of the company’s growth and development: rather than creating a business, their aim is to create a solid team, which in turn successfully leads and develops the business.

Good ideas aren’t enough: the crux is knowing how to turn them into practice, and that’s where people come in. Everyone brings unique talents to the table, which is why effective talent management is such a critical source of competitive advantage.

The example of Inditex

Several years ago, Amancio Ortega, the founder of Inditex, was in a meeting with his top leadership team. During the gathering, they told him not to worry about the future of his company: as long as he worried about them, they would worry about the business. This story perfectly illustrates what happens in companies and organizations.

Business leaders need to interact closely with people, make decisions with them and explain their rationale. Employees who feel their managers genuinely support their growth, development and wellbeing give the best of themselves. They help create a culture of transparency, trust and loyalty, and pull together to address company challenges. Positive economic results naturally follow.

At the ownership level, some owner families express concerns about company lore slipping away and out of reach of next-generation owners. While there are solutions to preserving in-house knowledge, I urge them to shift their gaze to something more critical: ensuring they possess the proper training and espouse core personal values like humility, effort and honesty.

With these tenets as their guide, they will be equipped to attract the best managers and specialists for their company and teams. As responsible shareholders, they will offer the company a stable mission and appealing, unifying vision. They will convert the objective of continuous employee development into a corporate value.

The People Committee

Not long ago, I had the chance to witness the positive impact of a “family day” organized by a family firm for its employees. The owner family went out of their way to spend time with all of their employees and their families.

As a side note, I should add that the gathering was an initiative of the company’s family council, whose role is critical in tending and supporting members of the owner family.

In terms of corporate governance, it’s crucial for family firms to dedicate time, energy and resources to people issues. Some might consider broadening the scope of the compensation and nomination committee to include a “People Committee.”

In addition to overseeing the firm’s management and governance, this committee would also be charged with thoroughly understanding and addressing the company’s social dynamics and people policies.

Stressing soft human skills

Lastly, at the managerial level, it is essential to reinforce the role of servant leadership by helping people grow with fair and balanced objectives, appraisals and salaries.

Leaders should champion the so-called “soft skills.” Going a step forward, perhaps we should forever reframe these interpersonal values as human skills as Simon Sinek suggests, since company leadership inevitably suffers when firms overlook them.

This means evaluating managers on how they treat people and demanding excellence. Everyone – regardless of whether they form part of the owner family – must be recognized, appreciated and motivated, and their roles must provide enough space to grow into the best version of themselves.

The key question

Decision-making bodies are tasked with analyzing loads of complex information, both quantitative and qualitative. When faced with a mountain of data, step back and reflect: will this decision improve the welfare of everyone involved?

Asking ourselves this question will add clarity and stronger criteria to the decision-making process – and ensure we get it right.