The power of “mattering”
The competitive advantage of your family enterprise can be enhanced or destroyed by the health of family relationships. In my experience as Chairman of our now seventh-generation family business which has been in business together since 1863, one of my core responsibilities was to protect the stability of our family relationships and the interests and priorities of our family shareholders. Fortunately, I learned early on that a well-run family business requires a well-run family. This means being proactive and creative in how we communicate and stay connected as a family. I am now Chairman Emeritus, and I have been reflecting on what it takes for business-owning families to function effectively as they evolve in size and complexity like my family did.
A Family Enterprise fundamentally differs from other businesses in the fact that where traditional business is a financial contract between its stakeholders, Family Enterprises have an additional dimension of an emotional contract between the stakeholders. In the seminal HBR article “What you can learn from Family Business,” George Stalk lays out the reasons why family businesses can outperform traditional businesses centring on the longer-term vision, stronger commitment to the stakeholders and better talent retention. All these advantages of being family-owned are either enhanced or destroyed by the health of the relationships within the family.
To further understand how family leaders can protect their competitive advantages by effectively managing the emotional contract they have with their family stakeholders, I have been working with Dr Darren Good, Professor of Applied Behavioral Science at Pepperdine Graziadio School of Business to explore this issue. Dr Good and I recently came across a thought-provoking book by Gordon L. Flett and Paul T.P. Wong titled The Psychology of Mattering: Understanding the Human Need to be Significant, which explores an overlooked psychological construct, “mattering,” which shines a new light on understanding human relationships and the need to be significant. Mattering, as presented by Flett, is a simple and elegant concept that could have profound relevance to the management of Family Enterprises. Dr Good and I believe Mattering provides a new lens for leaders of Family Enterprises as both a framework and an action plan to help family organisations function more effectively and has a high relevance to the successful transition of leadership from one generation to another.
Mattering includes three key aspects: feeling relied upon, being seen as important, and knowing one is noticed by others (Rosenberg & McCullough, 1981). In essence, mattering is about how important and valued an individual or group feels to others. For family businesses this applies to the Business, the Individual Family members and the Family Community, and whose successful interdependent relationships are key to an organisational function that enables the competitive advantages that Stalk identifies above. At the business level, stakeholders need to feel that their significance is reflected in the company’s actions and values. At the individual level, leaders must ensure that family members feel valued and appreciated for who they are.
Fostering a culture of mattering helps families build resilience and adaptability to the stresses of running a business together. It prevents family relationships from shifting from feeling scared about to merely being cared for, especially as the family grows and accumulates wealth. Mattering encourages family members to see themselves as appreciated by others in the family, regardless of their business involvement, which aids in navigating difficult family dynamics and business challenges. Aligning the company and its members through a sense of mattering, strengthens the family community and fosters a sense of belonging, crucial for positive association, trust and longevity.
To address the implementation of mattering in the context of Family Enterprise we have enlisted the support of George Stalk and the team at Generation Transition Advisors (GTA), a boutique advisory firm focused on guiding the business-owning family in their journey to navigate ownership and leadership transitions. The most powerful aspect of mattering may be its very introduction as a new language into work with and amongst the family. Everyone has a desire to ma4er, to be a part of an organisation that matters, and yet it is a sentiment not discussed openly. In practice, George and the team at GTA see ma4ering as a novel and powerful way to empower the mission and effectiveness of Family Leaders and particularly Family Councils.
We believe the ultimate goal for any family business may be to nurture and develop a mattering mindset amongst its family members and wider shareholders. We define a mattering mindset as an orientation that seeks to recognise and validate the contributions people make to the business and the family. Rather than people feeling like they must fight for a sense of significance, such a mindset would serve as a lens through which members would spot and acknowledge what each other is offering. Make no mistake, a Mattering Mindset represents a fundamental shift in the way Family Leaders interact with their shareholders. The leaders must proactively consider at the level of each shareholder how they matter in influencing the family enterprise. The traditional policy of “strong communications” is elevated to a mission of “deep connections” with the explicit goal of creating a Family Community that is engaged, cohesive and committed to the business and each other. Developing this mindset requires committed action.
Implementation of Mattering
To make the mattering actionable, the leader(s) of the family and the family ownership group should be proactive and purposeful in their approach to establishing a mattering mindset. The actions taken should focus on initiatives that emphasise that you want to listen to family members to understand who they are, their interests, and the differences among the family that can make you stronger as a group. Simply put, your goal should be to make as many of the family members feel that they matter and that your Family Enterprise matters. Below are tangible practices family leaders can consider to create a culture where family members feel valued and as though they have significance.
Action Plan
1. Practices to Establish a Mattering Mindset for the Family as a Whole
a. Begin a “Mattering Check” of the family. Using mattering as a platform, proactively seek to understand perceptions of the family about being a member of the family enterprise and to understand what matters most to them. The family health check can be done through individual or small group discussions with family members or a survey. Topics to explore with family members include:
i. The personal interests of family members. What motivates them? What do they care most about in their personal and professional lives?
ii. Areas of interest and perceived value in the family enterprise. In what types of roles would family members be interested in contributing either as active or non-active participants?
iii. Communication. How satisfied are family members with the level of engagement and communication amongst the family. Beyond receiving the communication, explore how it makes them feel.
iv. Culture of the family. What are the values of family members and the family as a whole that guide behaviour? What is the level of enthusiasm for spending time with siblings, cousins, aunts, and uncles How important is belonging?
b. Put in place structured communication to reinforce “mattering”
i. Family Communication (FamCom): FamCom refers to direct outreach in the form of business releases (formal or informal), newsletters, posts or emails that talk with family members in a way that helps them feel they matter. Regular and continuous communication on a variety of topics helps family members feel valued and included, regardless of their age or role in the business. It also provides an opportunity for the family to learn about individual members, their interests, and their personal and professional developments. This can include spotlighting family members' hobbies, celebrating achievements or recognising significant contributions. Think about the best modalities for reaching family members of differing ages, geographies or interests. For example, Trusted Family offers an excellent platform for regular and direct communication through a private application platform that is likely to be more effective in reaching younger family members in a way to which they will be more receptive.
ii. Family gatherings: Bring the whole family together (parents, children, spouses) to spend quality time together and strategically allocate some of the time for listening and learning sessions to gain input from family members and what matters most to them as members of the family enterprise. Make sure you are talking with your shareholders, not at them, and do not ignore the importance of applying mattering principles to the in-laws. This approach helps your family build goodwill and positive associations as a group, serving as a buffer during times of stress and conflict. It also minimises the risk of family gatherings being perceived as transactional or solely focused on business education, planning, direction or expectation setting, which can feel isolating for members of the family who are not involved in family governance processes, or operators in the business
iii. Celebrate Achievements: Celebrate achievements and contributions by family members using your knowledge of what matters to family members to tailor gifts and accolades that communicate the message that you appreciate who they are based on what matters to them.
iv. Practice Appreciations: Use your communication forums such as a newsletter, family chat group, formal meetings and gatherings and be intentional about openly expressing gratitude to each other and to celebrate diversity of ideas and individual talents that contribute to the strength and success of the family
c. Encourage behaviours and activities that focus on strengthening one’s sense of purpose through giving to others
i. Family Philanthropy and Volunteering Activities: Encouraging the family to come together for philanthropic and volunteering efforts allows members to use their time, skills, or services to make a positive impact in their community. These activities not only foster a sense of purpose and contribution but also help family members appreciate their blessings and the value the family has created for themselves and others. Research suggests giving to others is particularly helpful for enhancing the sense of Mattering for adolescents (Flett, 2022).
2. Practices to Establish a Mattering Mindset for the Ownership Group
Family Enterprises with family shareholders who feel strong positive emotions toward the family enterprise and are connected to the purpose and vision of the group are more likely to stay family-owned from one generation to the next. Family leaders who apply a mattering mindset to their engagement of the ownership group will be more likely to have family shareholders who feel connected to the enterprise and have aligned interests and priorities as a shareholder group.
Mattering practices to consider for the family ownership group are as follows:
1. Conduct a regular audit of the family ownership group to understand what “matters”.
Seek to understand the level of alignment of the family shareholders regarding their interests and priorities for the family enterprise. Topics to explore in the audit are as follows:
a. Individual ownership goals: What would family owners like to see the family enterprise achieve in the near and long term? What matters most to shareholders individually and collectively related to financial performance and non-financial interests such as social and environmental impacts that the enterprise has on its employees and the communities where it operates.
b. Risk Profiles: Another aspect of mattering is working to understand what risks are the family owners willing to take to achieve their goals and what are their concerns about where the enterprise stands in the face of economic conditions, political environment, and leadership capabilities. Understanding and respecting the perception of risk by both individuals and the group is an important way to address the issues that are likely to matter the most.
2. Develop an Owner Strategy Statement that “Matters”
Owners have the right to define what matters most to them in their ownership of the Family Enterprise (Source: Harvard Family Business Handbook). An Owner Strategy Statement is a tool family business leaders can use to give their ownership group a voice in providing direction to the business based on what they care most about. Owners who contribute to the process of creating an owner strategy statement, feel valued and as though they are important contributors to shaping the direction of the Family Enterprise. The strategy statement should cover the goals that the owners want to see accomplished and the guardrails that want around business activities to ensure their goals are accomplished – and matter.
3. Consistently implement and review your strategic practices and owner strategy statements to ensure they are inclusive and tailored to different generations
Mattering can fluctuate over time, with individuals’ needs to feel valued, needed, and appreciated varying by developmental stage (Flett, 2022). For example, a senior family member transitioning from the business to a governance role might feel a loss of significance. They could benefit from discussions about what is most important to them during this transition, dedicated family recognition, and support in identifying meaningful activities, such as mentoring younger members, sharing experiences with current family members, or documenting their lives for family records. Conversely, a younger family member might need recognition for attending family gatherings, volunteering, academic and personal achievements, and their willingness to contribute to family events or intern within the business. Committing to a Mattering Mindset requires continuous oversight, action planning, and execution. By focusing on developing and maintaining this mindset, family members are more likely to feel valued and contribute to the family’s resilience and adaptability in managing the business together.
In closing, we are excited by the potential of mattering to become an actionable strategy for Family Enterprises and will continue to work with Darren Good, the Pepperdine Graziadio Business School faculty, and the team at GTA on implementation frameworks for our family business and others. For families who are committed to a long-term, legacy vision, we see the adoption of a mattering mindset as a new approach for the stabilisation, inclusion and motivation of the family shareholders. We hope that leaders of Family Enterprises will give this approach serious consideration, as it has significant potential to be an effective way to strengthen both the family and the business and underpin the competitive advantages while reducing potential weaknesses.
