What Do Family-Owned Business CEOs Do?

October 2017—

More important, what should they do?

At a peer group meeting of eight successful construction industry CEOs years ago, the members began discussing how to get the most out of an industry standard software package. One CEO asked another a question about how to key in data to produce a desired result.

That’s when I’d heard enough. I jumped out of my chair, slammed my hand on the table, and exclaimed, “You mean to tell me that you, the head of a $40 million company, are at the office at 8:30 at night keying data into a computer program that one of your $15 per hour employees could run? Especially when you ought to be home with your wife and children?”

The CEOs were aghast; no one talked to them like that! I was on my heels too, chagrined by my outburst and uncomfortable in the knowledge that almost everyone else in the room could buy and sell me several times over. There was an uncomfortable silence after which one of the leaders said, “That’s why you’re here, Wayne. We’ve always run our companies this way, and it’s the only way we know.”

And then he asked the golden question: “What should a CEO be concentrating on to build his business?”

The question wasn’t just golden, it was wonderfully honest and self-effacing! This CEO took the time to put his ego aside and express a genuine desire to learn new behaviors that would help him increase his company’s success and, eventually, allow him to build new leaders to take his place.

Since that eventful meeting, we’ve spent a good bit of time helping other CEOs understand what it is they should do – and, just as importantly, what they should NOT do. We’ve identified three CEO behaviors which produce deep, impactful, and lasting results. I’m certain you and your furniture store can benefit from what I’ve learned. A few of the highest payoff roles follow:

  1. Grand master of the corporate strategy. CEOs must be the lead strategists in their family companies. Developing and nurturing the company strategy is a high leverage, high payoff activity. President Abraham Lincoln once said if he had a cord of wood to chop in six hours, he’d spend the first four hours sharpening his axe. Stephen Covey refers to this as “sharpening the saw.”
  2. We have referred to it any number of times as “working ON my business versus working in my business.” While even the most dedicated CEO cannot spend 100 percent of their time on high-value, 30,000-foot strategy, it’s reasonable to set a goal to spend 20 to 40 percent of your time working on strategy and long-term issues. Due to the press of working in closely held companies, many family business executives spend little or no time on this critical, high-payoff activity
  3. Keeper of the corporate/family vision. The CEO of your store should be the steward of the corporate and family visions. Most businesses don’t have explicit, written, mutually understood visions for what they want their companies to be and become. As with undertaking strategic planning in a corporate setting, pursuing a common vision which is exciting and compelling to all stakeholders is a fun and rewarding exercise; the main benefit comes from aligning everyone on the team during the process itself. That saves a lot of headaches and heartaches down the road.
    Identifier, codifier, and protector of the corporate/family values. Your store’s CEO is the policeman of the family business who must make sure everyone’s day-to-day activities adhere to the explicit and implicit values of the family and company.
    Once we were contacted by a second-generation business leader who was distraught that his newly instituted drug policy uncovered that one of their highest performing employees was using marijuana. He was considering keeping the drug test results confidential from other company officers and giving the employee another chance to clean up his act. In fact, what would you do if you found out one of your top sales associates was using illegal drugs?
    Here’s what we did: We talked at length about the importance of the drug policy, about how the store had adopted it wholeheartedly as a zero-tolerance policy, and what it might mean to the others if this young executive gerrymandered the results to protect an individual employee. After our discussion, he could see clearly that protecting the employee—despite his perceived value—was inconsistent with the values everyone in the family and business had agreed upon. The employee was duly terminated.

There’s an old cliché in business—and it applies just as much to family business—“Excrement (or a cruder version) rolls downhill.” Part of the meaning of this phrase is that people watch what leaders do and emulate the leaders’ behaviors. If a leader is dishonest, dishonesty becomes a part of her business culture. If she uses situational ethics, situational ethics become part of the culture. If she espouses one set of values verbally, but lives an altogether different set of values, which do you think become part of the culture? Likewise, honesty, great communication, a commitment to the family ideals, and fair dealing can just as easily become ingrained in the company culture.

Family-owned business leaders must examine how they invest their time and attention so that they’re sending clear signals about what’s important. Especially as they grow beyond age 55 and business succession becomes an ever more pressing issue, they must devote more and more of their time to evolving into true executives and mentors rather than simply super-productive managers and doers of an amazing variety of tasks.

About the Author

Wayne Rivers
Wayne Rivers is president of The Family Business Institute. He has appeared on The Today Show, CNN, CNBC and is an expert panelist for The Wall Street Journal. He can be reached at Wayne @wayne.rivers@familybusinessinstitute.com.