What is culture? How does it play out in family business?

A culture can be defined by four foundational stones. They are artifacts, perspectives, values, and assumptions (Schein 1985, Dyer 1986) and on these, researchers agree.

I’m wondering how you may view your family’s and your bisiness’s cultural code? Family units are built upon these same principles and the family business is often an extension of the family themselves.

Artifacts are the physical, tangible part of culture including layout of your store, staff dress, company logo, jargon, stories, myths, and ceremonies- might I know you by your uniform, or your lunch parties? Perspectives are the rules that govern decision making. They might be defined as how your employees act when your back is turned. Without question these perspectives are driven by the family manager in charge; however, perspectives are best explained as “group think,” the normal way specific problems will be handled. Examples of perspective are training for new hires, new product launches, performance appraisals, raises, and how they are implemented. The third cultural component is values. Values are different than perspectives because they are not situational. Values are broader, for example, we provide good customer service, or don’t cheat people, or we never question authority. The final level of culture that was uncovered by this research is assumptions. Assumptions lay the foundation upon which the other areas are built. To me, assumption makes me think of the lens of a microscope which is used to improve the focus on an object as you’re trying to get closer to discover its makeup.

Think closely about your company’s four stones. I’m pretty confident if you’ll take the time you’ll begin to see clearly this research is right. Artifacts, perspectives, values, and assumptions play a huge role in how your family business gets things done on a daily basis.

If ordered differently these four cultural stones will produce different types of family leadership. You should also consider a belief of mine, that the strength and focus of the family will also shape these foundational stones. Gibb Dyer’s research team found there are four basic types of family business cultures resulting from the “cultural code” produced by interaction of these four stones. The types of culture are laissez-faire, paternal, professional, and participative. (In a future post I’ll clarify each of these types.)

“Why does this matter?” you might be thinking. Culture and leadership types will be very big keys to your successful transition as you consider the future of your family firm and begin to look toward the time of generational transfer. Thinking about more than this week’s promotion, inventory levels, electric bills, and cash flow will result in a transition where more assets are kept among the family. If you believe business transfer is simply you deciding which one of your family members you’ll allow to buy a controlling amount the company stock, I’m afraid you’ll be very disappointed in the results.

If you decide you would like to have personal conversations about this subject don’t hesitate to contact me.