Family business dynamics– Trust

Picture of John Broons
John Broons

John Broons is a globally awarded family business expert. One of only three people in Australia to hold the coveted title of Fellow of Family Firm Institute (Boston, USA), John has dedicated his working career to answering the question: how do I guide and support families in business to a place where they’re thriving?

As a family business owner, you know better than anyone the importance of trust in your business relationships. Trust is the cornerstone of any successful family business, but what exactly does it mean in this context? And how can you ensure that trust is present in your own family business?

Family members having a meeting
Understanding the essence of trust

Trust in a family business goes beyond basic honesty and integrity; it encompasses the financial, emotional, and personal relationships within the business. When trust is present, family members feel secure and confident in the future of the business, leading to increased collaboration, better decision-making, and improved financial success.

Trust issues and their impacts

However, common trust issues such as nepotism, favoritism, and lack of communication can hinder a family business’s success. For example, the perception of nepotism can lead to resentment and a lack of motivation among non-family employees.

A real-life example

To illustrate the significance of trust in family businesses, consider the example of the Roberge family, who own a successful construction company in the US. The patriarch of the family had a handshake agreement with his two sons that they would take over the business when he retired. However, when the time came, he changed his mind and decided to sell the business to a third-party buyer. This decision caused a rift in the family, leading to a breakdown in trust and communication. As a result, the business suffered, and tensions within the family persisted for years.

Regular trust assessments

To avoid such scenarios, family businesses should assess their trust levels regularly. This can include conducting surveys to gauge the trust of non-family employees, as well as candid discussions among family members about potential trust issues.

Strategies for building trust

Improving trust in a family business can be achieved through actionable strategies such as creating a code of conduct, establishing clear roles and responsibilities, and fostering open communication. A code of conduct can set expectations for behavior within the business and ensure that all family members are held accountable. Establishing clear roles and responsibilities can help to avoid favouritism and ensure that all family members understand their place within the business. Finally, fostering open communication channels and regularly holding family meetings can help to prevent misunderstandings and build trust among family members.

Building trust in a family business is essential for success, and it requires a proactive approach. Assessing trust levels and creating actionable strategies such as a code of conduct, clear roles and responsibilities, and open communication are all steps towards building a culture of trust within your family business. Remember, as a family business owner, you have the opportunity to build a legacy that can last for generations to come. Start building trust today, and watch your business thrive.

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