Family businesses are leaving a very important effect on the Maltese economy. As a result, the beliefs each family holds dear to itself and the business have a direct effect on the national economy. And, the larger the family business, the greater the impact. The problem is for families to agree on a common set of principles through which the family can develop a shared purpose that will help the family to continue in business together.
It is the actual process of creating the mission statement that is beneficial
It is becoming increasingly important for family businesses to have this shared purpose which is then developed into a mission statement – a formal commitment by the family towards its vision for the future. In spite of the increasing importance of these credos, the process of developing such statements is not easy due to the multi-generational, diverse family branches and interests at play.
A family mission statement spells out the family’s values when taking key decisions in such areas as the education of the next generation, operations and business investments, and philanthropic actions.
Although the wording is crucial, it is the actual process of creating the mission statement and the interaction within the family that is beneficial – dialogue is encouraged and families are brought together to discuss what is most important to them. The process also encourages a spirit of corporate social responsibility by the family as a result of the philanthropic deeds that the younger generation could be introduced to.
The process of creating a family mission statement encourages families to reflect on the family’s origins, the sacrifices that predecessors made and where the family stands now. The family is in a better position not only to understand why the members do not agree on certain issues and be better placed to find solutions. It is a process that helps identify what members have in common – this is sometimes lost along the way.
Creating family statements is full of hurdles. Some family members might not be interested. All family members must buy in to the idea. If not properly coached by independent professionals, the process could be reduced to a mud-slinging exercise.
Children could end up criticising their parents for the little quality time that they would have enjoyed when growing up. On the other hand, parents could pinpoint shortcoming, complaining that their children are lazy, for showing ingratitude and having no commitment towards the family business.
Mission statements can at times be drafted so that they end up being either too specific or vague. Statements should be developed to take into consideration the changing needs of a family business.
These issues drive home the point that if the family mission statement is not properly drafted, it could simply end up being an exercise in creating a family good feel factor which will disintegrate at the first critical issue.
The family assembly has a valuable role here. A team of independent advisors who could help the family assembly achieve its objectives, draft an agenda, and serve as a back-up resource for the family meeting, helps to take the pressure off the relatives. Often the family members do not have the experience and knowledge to tackle specialist legal and finance issues and the advisors will help them see areas of common interest.
A family’s ability to clearly focus on a common set of objectives that the generations can agree on is what differentiates tightly knit enduring families from those that have no shared purpose.
Simply jotting down some words does not constitute a mission statement. But, the process of developing a mission statement will stimulate meaningful family discussions. Giving ownership of developing the family mission statement to the family assembly will go a long way in developing long lasting bonds within the family that could face up to the continual challenges that these businesses have to encounter.
mariod@2mmanagementconsultancy.com
Mario Duca is managing consultant at FBS2M Family Business Solutions and president of the Malta Association of Family Enterprises.