How does culture play into the success of the family farm? Family farms can measure success and value in a number of ways, whether objective (for example, income) or subjective (for example, the perceived success of business owners; working with family members). We believe that when family businesses practice a culture of collaboration, they will operate more efficiently. The culture of collaboration is driven by five main forces: (1) fairness, (2) goals, (3) family business functionality, (4) tension, and (5) creating an environment of openness to differences.
Collaboration. Collaboration allows the concerns of both individuals and groups in a conflict to be considered. The goal of collaboration is to find a solution that satisfies both individuals’ concerns. Collaboration not only allows for a unifying solution to be found, but it also creates opportunities for growth from conflict. Merging insights from different individuals or groups is another benefit of collaboration.
(1) Fairness. Researchers have found a relationship between how family businesses practice fairness in both the workplace and the household and how successfully a family business operates. They found that when fairness is practiced in the family business, it may yield positive business reputation, increased profitability, and sustainability over time.
(2) Goals. We have found that goal orientation in family businesses influences the business’s financial performance. Family farms can pursue economic and non-economic goals that are family-oriented or non-family-oriented. The goals that we studied in regard to a culture of collaboration were profit, positive reputation with customers, and family-related goals.
(3) Family business functionality. We created a unique scale to measure family business functionality, the FB-BRAG. The scale measures how often the respondent is satisfied with the following: that they can turn to people at home and work for help when something is troubling, that other in the family and business accept and support their ideas, the way others in the family and business share time together, and the outcome when a decision has to be made in favor of what is best for the family versus the family business. By responding to the following four categories, a score is calculated that falls into one of the following categories: dysfunctional, moderately dysfunctional, or highly functional.
(4) Tension. Tension and conflict in family businesses can stem from the family, the business, or a combination of both. The competition for resources between the family and the farm that exists uniquely in family business can lead to conflict. We used tension stemming from the following aspects of the family business: confusion over authority, unequal family ownership of the business, compensation levels, failure to resolve business conflicts in family members, workload distribution among family members, and competition over the scarce resources that are shared between the family and the business.
(5) Creating an environment of openness to differences. Culture can be highly influential in how family businesses operate and succeed. We believe that creating a culture that is open to differences will allow for a freer flow of ideas and innovation. One would hope that openness to new ideas and innovation would lead to positive returns, both financial and otherwise.
We found that various factors affect the two ways family businesses can measure success. Income and perceived success are both positively affected by defining fairness according to contribution, having higher levels of family functionality (measured by the FB-BRAG), fostering a culture that values differences of opinion, having a business that has lasted for generations, and having more employees. For family businesses that want to focus on perceived success (as a subjective measure of success), defining fairness by treating everyone the same leads to higher perceived success. A positive reputation with customers also significantly increases perceived success in the family business. For family business income (an objective measure of success), higher family business tension was associated with higher income.
Overall, a culture of collaboration within a family business leads to higher levels of both objective and subjective success. Family businesses that value fairness according to the contributions of family members, have higher family-business functionality, and foster a culture that values differences in opinion will receive higher returns. As a family business, you should strive to create a culture of collaboration to be more productive and foster a healthy work environment for family members and other employees.
References
Wiatt, R. and Marshall, M.I. (2017). “Introducing a New Functioning Assessment for Family Businesses: The FB-BRAG”. Purdue Extension EC-813-W. Available at: Purdue Extension.