Mark Goyder is the Founder Director Tomorrow’s Company, the business-led think and do tank, and co-author of the Family Business Stewardship report. In this article, first printed in the Raconteur supplement of The Times and in association with the Institute for Family Business, Mark discusses the role of stewardship as well as setting out the four major principles that underpin family business stewardship.
Family Business Stewardship
By Mark Goyder
Family businesses inherit three key assets. First family capital – that emotional attachment by the family to the business. As Alex Scott, Chairman of Sand Aire, puts it “This business is me. It is in my guts and it is in my demeanour and I live it and I breathe it and I sleep it”.
The second is people capital. As Jonathan Wild, Chairman of Betty’s and Taylors puts it “Such is the strength of the culture that sometimes non-family behave more like family than family”.
Thirdly there is financial capital. As Peter Gordon, Chairman of William Grant & Sons puts it “Being unquoted allows us to make utterly unique decisions”
By their stewardship successful businesses also build social capital - an enduring link with those around them. Take Marshall of Cambridge Group, which has taken on young apprentices every year since 1921.
Successful family businesses have stressed leadership with a clear vision, values, good governance, and succession planning. These are summed up by the principles of stewardship and from these we have developed an agenda for family business stewardship.
Stewardship starts with clarity – about why we are here; where we are headed, what we stand for, and what the shareholders expect of the directors. That’s why we call Principle One “Setting the Course”. Many family businesses have a charter. Owners define what they expect from the family, the board and the management. Have you? The Linney Group are relentless in their focus on culture in the company. Are your people clear how they should behave?
Next comes the restlessness that marks out all the great athletes. Principle Two is about “Driving Performance”. How do you benchmark yourself against the best? Do you have independent non-executive directors who insist that you benchmark yourselves against the best?
Principle Three is called “Sensing and Shaping the Landscape”. How do you scan and improve the environment around you to mutual advantage? Have you built in the rising importance of carbon costs into your model?
The best businesses manage the present while investing in the future. They think about succession as well as performance management; capital as well as revenue, reputation as well as results. We call Principle Four Planting for the Future. They put more money into training, infrastructure and marketing. Do you? Are you mobilising the next generation?
Family businesses are the first to admit there is nothing perfect about them. With families, when things go wrong they can go very painfully wrong. The principles of stewardship offer an important guide to avoiding that pain, and making the very best of what you have inherited.
Mark Goyder is Founder Director Tomorrow’s Company, the business-led think and do tank. He was co-author of the Family Business Stewardship report.