The Quiet Strength of the Family Business

The 14th Family Business Day, held on 29 January at Nyenrode, saw the presentation of the book ‘De stille kracht van het familiebedrijf’ (The Quiet Strength of the Family Business) by Prof. Dr. Roberto Flören and Stefan Jansen RA. It is the latest book in a series of three about family businesses.

Three Success Factors
Flören explains the title: “Scandinavian academics have shown that a family business needs three things to be and remain successful: Entrepreneurship, management and paternalism. Entrepreneurship is about developing new ideas and realizing these plans. Management is about ensuring the growth of the business, controlling and managing the figures and directing the workforce. Paternalism relates to being responsible for other people.”

The Soft Side
The book deals with this last success factor, the somewhat softer side of family businesses: everything that relates to caring for people. According to Flören, the term ‘paternalism’ has rather negative connotations in the Netherlands. “It is often associated with the idea that someone else decides what is good for you. That is why we opted for the term ‘quiet strength’ in this book. That sounds more positive.”

“We produced this book together with eight colleagues at Nyenrode, who made contributions based on their own expertise,” says Flören. The book deals with such topics as social enterprise (Henk Kievit and Gert van Dijk), socially responsible enterprise (André Nijhof), business ethics (Edgar Karssing), leadership (Jaap van Muijen), being a good employer (Lidewey van der Sluis), knowledge management (René Tissen) and spirituality (Sharda Nandram).

Less Sexy, perhaps, but Still Popular
Caring for people is something that is done more by family businesses than by other businesses, says Flören. “Stock market listed companies concentrate primarily – until recently in any case – on shareholder value. These days, that is rather looked down upon. Shareholder value is important if the shares in a company are being traded. In the case of family businesses, there are no ‘share traders’; instead, there are ‘shareholders’. The owners of family businesses are therefore much less focused on amassing more and more. In family firms, there is a much greater focus on such things as stewardship, a term with a Biblical connotation. The business is given ‘into your care’ and, in due course, you hand it on to the next generation – preferably with a bit more than you started with.”

“Employees in a family business are also much closer to their employer”, Flören continues. “Everyone knows the owner of the business and the owner also knows you. In contrast to the management of many other businesses, the boss does not change every three years. Instead, the same boss may stay in place for as long as 25 years. As a result, people feel considerably stronger loyalty to each other.”

Family businesses often have strong ties with the region in which they operate, says Flören. “Members of the family behind a family firm usually live close to the business, which means they often meet employees outside of work. They very emphatically form part of the community. It is therefore much more difficult for them to dismiss employees. This means that owners of family businesses will certainly not do this lightly.”

He continues: “Family businesses are therefore much more about continuity and less about growth. In comparison with other businesses, they are rather more stable. Various studies also show that they are much slower to dismiss people in times of recession and are more inclined to eat into their own capital instead. In times of economic growth, they also grow rather less rapidly than other businesses. In that respect, they are very important to the economy. They may not be ‘sexy’, but people are keen to work for them.”

  Interviews
  For the purposes of the book, the owners of eleven family businesses were also interviewed about
  their ‘quiet strength’ activities. Among the businesses interviewed there were some very big ones, such
  as Van der Valk and Asito, the Netherlands’ biggest family firm with 65,000 employees. Dokkumer
  Vlaggen Centrale also cooperated in the creation of the book. On the other hand, the book also mentions
  some surprising and less familiar businesses. As an example, Flören cites a manufacturer of egg
  powder. “They get through about a billion eggs a year. That makes them a world-class player, but
  nobody knows them.”

  The questions that were put to them were: 
  What extra things do you do for people as a family business? In what ways do you do more than a non-
  family business does?

  Flören quotes some examples of ‘quiet strength’ from the book: “For example, Asito told us about a
  music theatre in Twente that was in trouble. Asito decided to sponsor it for the next 30 years. And they
  don’t even demand very much exposure in return.”

  Another example: The powdered egg manufacturer gave an account of its approach when employees
  fall behind with payments. “In such times, the employee does not work as well because of his or her
  problems. The company then takes over all debts, pays the rent and etcetera out of the salary first, and
  pays out the remainder at several points during the week. This enables the employee to regain control 
                                                                  over his expenditure.”

According to the owner of Dokkumer Vlaggen Centrale, one of the main tasks of the company is to generate employment in the region. They do everything within their power to keep the work within the region. Their reasoning is that as long as the revenues are greater than the variable costs, the flags will continue to be produced in the region. Only in extreme cases is the work outsourced to low-wage countries, says Flören.

Family Business Day
The 14th Family Business Day was organized by Nyenrode, ABN AMRO and Berk Accountants en Belastingadviseurs. The theme this year was ‘The Success of the Family Business’. In addition to the presentation of the book ‘De stille kracht van het familiebedrijf” by Flören and Jansen, various business people from family firms gave talks. The day closed with a vision of the family business from former government minister and present bank director, Joop Wijn.


See also: http://www.dedagvanhetfamiliebedrijf.nl/



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