Values and American Family Businesses

Starbucks recently announced an initiative to promote a national conversation about race relations and racial diversity in the United States. Although it has met with some public backlash, Starbucks and its chief executive office, Howard Schultz, have firmly defended the program. Mr. Schultz clearly feels strongly about the issue and is using his very successful business and ubiquitous brand to help promote the discussion. Starbucks is not the only example of a for-profit business taking a position on a sensitive, but important social issue. Others, such as Hobby Lobby, have fought fiercely for their right to take positions – sometimes controversial positions – on social issues while continuing to run their businesses in a for-profit mode. This wave of “corporations with social opinions” is becoming meaningful in the United States, and it is being given more room to grow by our Supreme Court. It may be here to stay as part of the American corporate landscape. But in the context of a family business, this phenomenon offers another opportunity. While promoting social values and a healthy dialogue about them may be a good thing for our society, rallying being a social cause or a set of values can be an outstanding cohesive for a business. In the context of a family business, where the ownership and management frequently come from the same background with the same general life experiences, this can be a uniting factor, above and beyond the profit motive and the family’s welfare. In any given family business, there are disputes that arise out of business differences, personal differences and family differences. Much has been written on the added challenges of leading a business amidst sibling rivalries, generational prejudices and general family dysfunction. Financial reward is not always enough to smooth over these differences. For many family businesses, there are other jobs and other ways to make just as much money. Uniting around the family name, the family relationships and the family welfare can be a strong bind, but if the interpersonal difficulties arose out of these things in the first place, they are probably not enough to align the various interests. A family business, however, may have one additional, unifying tool that another business might not have. Because of the very nature of the family business and shared experiences of the family members, they very likely hold many of the same underlying values and beliefs. Regardless of their interpersonal differences, their experiences and way of life may have guided the family to feel similarly about broad social and cultural issues. A family business can harness the power of these shared values by making them part of the culture and philosophy of the business. This can give family businesses one more reason to stick together when the times are tough. If, for example, a family has a strong religious background, the business can incorporate that priority into its philosophy and operations. It can include that in its mission statement and its stated goals. It can work to be known by its partners, customers and community as a business that stands for such religious principles. With that foundation, the members of the family business are not just working for profit or their family name; they are also working for their shared religious beliefs. It is a tool family businesses should consider as they explore ways to define and distinguish themselves, but also explore ways to unify and align the family behind the business. Drew Steen is a Business Transactions attorney at Davis Wright Tremaine.  He represents both buy-side and sell-side clients in mergers and acquisitions, venture capital investments, joint ventures, equity co-investments and restructurings.  He also serves as regular corporate counsel for several closely-held companies.  Drew can be reached via email at andrewsteen@dwt.com or directly at 206.757.8081.