Family Business in the Age of Uncertainty
By Justin Blake
Despite skepticism around nepotism, family businesses remain the most trusted form of business, with major trust advantages in North America and the European Union. According to the 2017 Edelman Trust Barometer, family-owned businesses are trusted by 68 percent of respondents globally. This dynamic creates both a mandate and an opportunity for family businesses to communicate their value differently.
President Trump is not the first U.S. President to enlist family members to execute White House business. In fact, several presidents have appointed their kin to positions of power – the Kennedy, Adams, Roosevelt and Eisenhower administrations, to name a few, all received criticism for nepotism. However, nepotism is not always a bad thing and can even have benefits. For example, family members are oftentimes less inhibited in disagreeing with one another than non-family members. Despite these benefits, however, the growing wave of populism and the perpetual attention on the Trump administration brings three key challenges to the forefront for family businesses:
Staying in the background isn’t an option
As President of the United States, President Trump is presenting a highly visible model of a family business leader at work. Amid this increased scrutiny, it’s important for family business leaders to showcase their own model by communicating about their values, business goals, philanthropy and personal stories.
The 1 percent is under attack
Scandals have fueled increased skepticism of the wealthy and growing concerns about their motives and influence. With more than half of the respondents from the 2017 Edelman Trust Barometer believing that the “system is broken,” the 1 percent – and those perceived to be part of the wealthy elite – continue to be distrusted by the general public. As tides of populism rise and more people question the influence of the wealthy, business-owning families (with actual or perceived wealth) must communicate and demonstrate how and why they contribute to society in positive ways.
Family loyalty is no longer enough
More important than ever, family businesses must select and position next generation leaders in a way that creates confidence, not insecurity. Next generation leaders have an extra burden of proof in demonstrating their ability to lead based on merit, not just lineage. In the era of Trump, families and next-generation leaders must strive to make their first name as important as their last name.
Family businesses have weathered storms before, but in an era where anxieties are high and everyone is watching to see what happens next, they must be bolder in communicating and reinforcing the immense value they create across business and society.
Justin Blake leads Edelman’s Global Family Business and Executive Positioning offerings.