Editor’s Note: This is the second of Chuck Gremillion’s columns on family business. Read the introduction to his series by clicking here.
Family Business: The Importance of Clarity and Alignment
By Chuck Gremillion
Do you know where your business is headed? In the rush of just getting work in and out the door, you probably don’t stop to think often about the future. You might even think that “clarity” and “alignment” are just buzzwords for big company people.
But here’s a secret: Even family businesses can sometimes benefit from better clarity and alignment!
In fact, I believe clarity and alignment compose the second most important building block of a family business, only following trust (I wrote about trust last month; to read that column click here.)
Why are clarity and alignment so important in a family business? Because when a goal is clearly understood, it is much easier to achieve, naturally elevating morale. The opposite is also true. The absence of a clear goal causes confusion and discontent.
The Clear End Game
Here’s an example from my family business, A&E -- The Graphics Complex: My parents decided to pass the business on to me and my seven siblings in 1975. In the early 1990s, my brothers and sisters and I decided that we would not pass the business to the third generation.
Why? Because we knew that there would be too many grandchildren to do so. Grandchild number 30 will be born this year, and that’s just too many owners!
Preserving our love for one another was foremost to us, and we were not willing to jeopardize that by balancing the challenges created by deciding which of the 30 grandchildren could not only work in the business, but also who would run it. So we made the clarifying decision to sell A&E someday.
This important bit of clarity helped us tremendously. Because we knew the end game, our goal became to grow A&E and make it as valuable as possible with the hope and expectation that we would reap the benefit through a sale to a third party at some point. I consider this decision one of the two or three most important that we made because it provided clarity and created alignment within our family.
So how did we find clarity at A&E? One key element was transparency. We kept everyone in the company informed about our progress, strategies, and even our finances.
At our quarterly employee meetings, called “State of A&E” meetings, I shared our income statement for the recently concluded quarter along with the previous 12 months and compared them to the same periods from the year before. I took time to explain each line item on the income statement so that everyone understood what things cost, what drove expenses, the importance of sales revenue, and approximately where our break-even point was. These meetings engaged and impacted everyone on the A&E team because every team member, no matter their role or job description, could clearly see and understand what we were trying to achieve.
Finding a Vision, Making a Plan
An essential part of clarity is having a vision. If done well, a vision statement can provide clarity of purpose that helps remove indecision, guides behavior, and empowers performance for all members of the organization.
At A&E we created a formal vision and core values statement 1991. We learned the concept while taking Total Quality Management (TQM) training from the Juran Institute in 1990 and 1991. Over the course of several meetings we brainstormed a vision that communicated what we wanted to achieve as an organization and the kind of success that we imagined. And we identified the eight core values that defined the guidelines of our behavior as we worked to reach our vision.
However, just creating the vision and values didn’t exactly solve all of our problems! About six months to a year after we adopted our vision and core values statements, I remember all of us feeling that we had not made much progress. Then my brother Roger made the realization that what we lacked was a strategic plan. That was a true "ah-ha" moment.
We then hired a consultant from the Juran Institute for a weekend retreat at the Houstonian Hotel & Conference Center in November 1991. The consultant taught us to start with the end in mind (our vision) and develop long-term goals that we believed would put us on a path to achieve our vision. These long-term goals, and the strategies and tactics associated with achieving them, also had elements of our core values within them.
Our first strategic plan, the first of many over the years that followed, was produced that weekend. To this day, I consider the creation of our first strategic plan to be a breakthrough moment for our company.
As a result of providing clarity with our vision (our ultimate destination) and core values (guidelines for our behavior), we were able to create alignment among all members of our organization, both family and non-family. To put it more simply, we were all rowing in the same direction to reach our desired destination.
If you would like a copy of the A&E’s Vision and Values, please contact me at firstname.lastname@example.org, and I will be happy to send you one.
Chuck Gremillion now runs Gremillion Consulting Services LLC, which focuses on the needs of small businesses. He is a past president of IRgA, and chairman of the IRgA President’s Council. He welcomes input and questions from other family business owners. He can be reached at email@example.com.