A family code of conduct is a list of guidelines (or expectations) for communication to which everyone agrees to adhere when they meet or interact as a family. It governs how participants talk to each other, not what they will talk about. It helps in preventing misunderstandings and conflicts in the family.
The initial moments when multigenerational family members convene can be particularly challenging. Differences in viewpoints, lifestyles, and working methods coupled with a sense of apprehension about finding common ground contribute to this unease. Fears may arise that certain voices will dominate, or that business issues will trigger deep-seated emotions.
In such moments, a code of conduct serves as an anchor to create a safe space for communication. It consists of a set of agreed-upon guidelines that govern how family members will conduct themselves during meetings.
For instance, a family’s code of conduct could include statements like “Refrain from interrupting before the family member completes sharing his/her thoughts,” “Get everyone to talk, not just the people who always dominate,” or “Talk about your own feelings without blaming others.”
Culture plays a significant role in shaping family dynamics. Different cultures have distinct values, norms, and expectations that influence how family members interact. In some cultures, collectivism is vital, emphasizing close-knit relationships and communal support. For example, the collectivist culture in Asia.
In some families there are individualistic cultures that prioritize personal independence and autonomy. These cultural nuances influence communication patterns, decision-making processes, and the roles family members play within the unit.
Joint families have been more conventional in Indian family businesses. They serve as a strong foundation of trust and loyalty, thus being an advantage. However, they have their own set of challenges to manage. Over time, however, nuclear families are becoming increasingly common in the Indian family business ethos.
The values and principles practised by the founding generation through narratives and experiences serve as a guide for next generations.
Family traditions, rituals, and customs are repositories of shared values.
The way family members communicate and interact with each other shapes their understanding of the family's core values.
Family leaders who embody the values and exhibit the relevant behaviour serves as role models for the younger generation. Their actions greatly influence how values are perceived and embraced within the family business.
In a family business survey conducted by PWC (2019), Maltese family businesses reported that the values and purpose have framed their company’s vision and are communicated on an ongoing basis to employees.
The values and purpose stemmed from those running or owning the business and have become stronger over the years.
"The Maltese people are characterized by their use of the Maltese language and adherence to Roman Catholicism, they trace their origins to a diverse mix of colonists from Sicily and Calabria who repopulated the Maltese islands."
Mr. Luiz Alexandre Garcia, the third-generation Chairman of Brazil’s Algar Group described it in this way: “Algar Group has operated for 90 years in many different fields and the business has changed a great deal in that time. But the principles, purpose and values of the company have never changed. That’s our primary legacy. It is what has brought the company to its position today and what will carry us into the future.”
Source: KPMG- The enduring legacy of business families 2021
Mr. Luiz Alexandre Garcia, the third-generation Chairman of Brazil’s Algar Group described it in this way:
“Algar Group has operated for 90 years in many different fields and the business has changed a great deal in that time. But the principles, purpose and values of the company have never changed. That’s our primary legacy. It is what has brought the company to its position today and what will carry us into the future.”
The code of conduct signifies a shared commitment to the well-being of all family members and the business perpetuity. While family dynamics might inherently involve differing perspectives, aligning on common goals and expectations establishes a strong foundation for decision-making.
The code of conduct should outline a process for conflict resolution that prioritizes open dialogue, empathy, and finding common ground. Encouraging a solution-oriented approach, rather than allowing conflicts to fester, ensures that differences are addressed promptly and constructively, safeguarding both the family relationships and business.
The way a family business interacts with the outside world plays a crucial role in shaping its reputation and brand image. Defining a code of conduct for these external interactions can help maintain consistency and professionalism.
We strive to address family, and family business conflicts privately and not argue in front of a client, employee, customer, or advisor.
We understand that blame and accusations are not productive places to start conversations. We want to approach each other with dignity and respect. We ask to be heard and try to remain inquisitive.
We make every effort to honor our time commitments, to complete tasks on time, arrive at scheduled meetings and events on time and be ready to participate.
Adapted from book Borrowed from your Grandchildren
A well-crafted code of conduct acts as a linchpin, ensuring effective communication, conflict resolution, and accomplishment of shared objectives.