Stacy Allred

Managing Director, National Lead of Family Engagement & Governance for J.P. Morgan Wealth Management

A series with Dennis T. Jaffe, Ph.D., in partnership with J.P. Morgan Wealth Management’s Family Engagement and Governance team.

Dr. Jaffe is a leader and an author in the field of family enterprise consulting. An organizational consultant and a clinical psychologist, he helps multigenerational families develop governance practices that build the capability of next-generation leadership and advises financial organizations and family offices on serving family clients.

J.P. Morgan is honored to share a special series highlighting Dr. Jaffe’s findings from successful family enterprises.

This image shows a diamond with 8 insights from the wisdom of the most successful long-term family enterprises.

Generative families attribute their long-term success to a motivating core mission and set of values. Their values define and sustain a consistent, resilient and successful culture of both family and business, as this family noted:

The reason we unlock our doors every day is what my mother and father taught us, and what their grandparents taught them – that this is your family business. It exists to make the community a better place and to make the family closer and happier. If it’s not providing those things, you’re just kind of spinning your gears. Our family business is a tool that brings the family together in a pursuit that gives us all some opportunity and some happiness.

Articulated values codify a generative family’s culture and align members around it, as they move from their legacy of prior success through to the present to adapt, change and redefine themselves for the future. As a unifying and motivating force for each family, values help to recruit and rally the next generation with a sense of meaning and purpose – offering incentive to become involved in the business when they could choose to go their own way.

Values come from the family’s legacy, but they also evolve as each new generation emerges. One family with 18 “principles” provides a flavor of their approach:

We want to maintain the traditional values in our family system but modify them to meet changing business conditions. Staying together was a key point of the code and a reason to maintain high moral standards, honesty and values; then, the goal was to cultivate and strengthen the bonds of trust in each other. Recognizing that continuing family security and growth came from the following:

  • Hard work, initiative and frugality
  • Accepting, honoring and following decisions by arriving at consensus
  • Giving each individual maximum opportunity morally, educationally and professionally
  • Enabling senior members to reside in their countries of choice

The relationship between business and values

Values are not just about having a successful business. Rather, they’re how the business and family conduct themselves. They often indicate that profits are not the only guiding purpose for the family; they also see their business, family and resources as standing for something more than profit. There is a commitment to others – to employees, suppliers, customers and the community – that must be respected. Values make it clear to all of these stakeholders what they can expect from the family and how they can be held accountable. They also let family members know what is expected of them in their own behavior.

The family, of course, supports the business, but their values lead them to also support nonfinancial aspects of doing business and uses for their wealth. They want to have inspiring, educational and fun family gatherings; they want to develop a responsible rising generation; they want to find harmony and shared activities that matter; and they want to make their community and the world a better place to live. Because of their resources, these families decide that while each household can pursue these as individuals, they can do it better together. All of these activities use the resources and wealth created by the business, but they are not business goals. They are about the impact they want their wealth to have on their lives and beyond.

Values can be unique to their entities

Values tend to look different for different entities. Individuals have values, as do families and businesses. Businesses have a values statement; generative families do as well. Family enterprises have different value statements for the family and for the business. They are related and complementary, but as each entity is different, so are their values.

Values are not static, and they certainly are not defined by a single word. Each value must be given substance – a personal definition of what it means and how that value is to be expressed.

Values are also not necessarily complete; they are statements of aspiration, of what people want to see. Often, they can be viewed as difficult, placing pressure on family members to act in different ways to reflect what the value expresses. And while values are often conveyed as statements of aspiration, they provide achievable projects with which to be involved. Ultimately, values are living, motivating ambitions by individuals, families and businesses: they define actions, directions and goals.

Learnings from long-lasting global business families

Too many families start and stop with a statement of several worthy but ambiguous values that they and their business represent. But creating values is a process, and so is putting them into action. Here are insights from the families with whom we’ve spoken.

Come together across generations to explore and define mission and values

The first step is for the family to come together to consider what matters to them. They must share and explore each person’s individual values, as well as the values of previous generations that have led to their success. This exploration is not a quick process; it requires taking the time to get to know each other and to discuss the past, present and future. It often takes place over several meetings or in small groups.

Cross-generational dialogue about values and purpose is the foundation for family engagement in creating their future. By inviting each new generation into this discussion, the family initiates conversations that anticipate change. To hold these discussions, the family must get together regularly, build relationships and integrate different agendas of new and growing family members. They are heirs to significant wealth. They become generative when they shift from being primarily consumers to taking on the responsibilities and opportunities that their resources provide.

Increase nonfinancial “family capital”

There are not only financial resources and value within a family. Instead, a family is equally motivated to develop nonfinancial sources of value, too. These include human capital, capabilities, energy and motivation that can be contributed from family members, the social capital developed by the family’s involvement and contribution to the community and environment and the relationship capital of the family’s trusted relationships and organization. A generative family should create a plan not just for business and financial development, but for their nonfinancial capital.

Share personal values

The family must respect its diversity in order to include all the new members and get to know what they can contribute. A family discussion of personal values, and how each person’s individual values can contribute to the whole family, is necessary before considering what values are shared. A great family allows each individual to be part of it without sacrificing their individual values.

Remember, affirm and celebrate the legacy values that have guided the family and the enterprise

Each new generation will likely get further away from the example and philosophy of the founders. While the family will adapt and redefine its values with each new generation, they must learn from and begin with the values of the founders. Telling the story of the founders and learning from their example is a way to acknowledge how the family and its heritage are special. Families sometimes grapple with the question of how to balance honoring and learning from the values of their founders and past generations while allowing openness for new emphasis and concerns of each emerging generation. This is a subject for family conversation that should not be an either/or conversation, but a more inclusive one.

Create a family and business values statement

The extended family should work with the legacy values and individual values and come up with a values statement that tells who they want to be and what they want to express as a family. These are separate from those of the business, which build upon the legacy values of the founders and express what the legacy business stands for and aspires to. The family group defines its own values, but the business values incorporate input from nonfamily business leaders. Ideally, the statements should not be single-word values, but should express more clearly, in a few sentences, how those values are defined, seen and practiced.

Initiate specific actions to realize each value

Values are living entities and guides to action. They must be lived to become realities. They are aspirations because sometimes they are hard to live by. The family should have periodic conversations about how they are living their values and how they can do better. These can be tough conversations, as the family must be honest about its challenges and even shortcomings. However, values affirm and inspire the family to reach higher. This activity of aligning behavior with values leads to changes that excite and motivate the family toward higher and higher achievements.

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