The Family Business Advantage:
Trust and Stewardshipc
Justin B. Craig Ph.D.
Introductory
Frameworks
Paradox = Inside-Outside
Priority = Proficiency
Pathways = Go Outside
Paradox = Leading by Leaving
Priority = Prescience (Foresight)
Pathways = De
velop timeline
for retirement. Create
development management
systems. Stick to the plan.
STEWARDSHIP
APPRENTICESHIP
Paradox = Informal Formality
Priority = Perspicacity (Insight)
Pathways = No simple pathways
ON
IN
Paradox = Continuing Differently
Priority = Perpetuating Values
Pathways = Keep philosophies, not details;
Learn market value of family values
LEADERSHIP
Ken Moores and Mary Barrett: Learning Family Business…Paradoxes and Pathways, Ashgate, 2004.
The Developmental Stages of the Ownership System
Cousin
Consortium
Sibling
Partnership
Controlling
Owner
Governance Structure for a Complex Family
Enterprise
John Ward’s 5 Insights
ISSUES
same…
PERSPECTIVES
differ
RESPECT
the
Challenge
PLANNING
is
ESSENTIAL
COMMUNICATION
indispensible
COMMITMENT
to Us
Source: “Perpetuating the Family Business. Palgrave Publishing, 2004.
TRUST
&
STEWARDSHIP
Journal of Small Business Management 2008 46(3), pp. 351-374
Leveraging Family-Based Brand Identity to
Enhance Firm Competitiveness and
Performance in Family Businesses*
By Justin B. Craig, Clay Dibrell, and Peter S. Davis
.
Stewardship Climate
Research
Stewardship Climate: Scale Development and Validation. Justin B. Craig with Don Neubaum, Chris
Thomas and Clay Dibrell. ln Press at Family Business Review.
The Fundamental Dilemma
Family
=
Social System
Business
=
Capitalist System
Similarly…two complex topics
TRUST
STEWARDSHIP
TRUST
STEWARDSHIP
TRUST
Are we in good
hands?
The Three Circle Model
2016 Edelman TRUST Barometer
Trust Quotes
• …the spinal cord of all economies
• “Trust is an important lubricant of a social system, it
is extremely efficient; it saves a lot of trouble to
have a fair degree of reliance on other peoples’
word.” Kenneth Arrow, Nobel Prize Economist
• “Without trust, we don’t truly collaborate, we
coordinate, or at best, cooperate. It is trust that
forms a group into a team.” Stephen M. R. Covey
Mayer, Davis and Schoorman, 1995
• …a willingness to be vulnerable (Mayer, Davis, and
Schoorman, 1995)
Qualities:
• Ability: possession of the means or skill to do
something
• Benevolence: desire to do good to others; goodwill;
charitableness
• Integrity: the quality of being good; having strong
moral principles; moral uprightness
The Trust Project at
Northwestern
TRUST = ABILITY, BENEVOLENCE, CONSISTENCY &
INTEGRITY
Trust = I - A B C
Integrity - Ability * Benevolence * Consistency
A WILLINGNESS TO BE
VULNERABLE
Are we in good
hands?
STEWARDSHIP
STEWARDSHIP CLIMATE
Psychological (Individual level)
1. intrinsic (rather than extrinsic) motivation
2. (high) organizational identification
3. use of personal (rather than positional) forms of
power
Situational (Organization level)
1. collectivist culture (rather than individualism)
2. low power distance
3. involvement orientation
Stewardship Climate Research
To achieve collective goals, stewards have a psychological preference for
using personal power rather than institutional-based forms of power. Rather
than relying on formally established authority, personal power relies on
interpersonal relationships, often built over time, based on mutual trust,
standards of reciprocity, and information exchange (French & Raven, 1959;
Kurland & Pelled, 2000).
Following social exchange theory (Blau, 1964; Emerson, 1976), building
trust, establishing norms of reciprocity, and gaining recognition as a
knowledgeable leader is accomplished through information sharing (Heath,
1994).
Providing sound rationale for decisions that will impact or potentially
change the way work is done further builds trust and leads to attributions of
expertise (Kurland & Pelled, 2000).
Stewardship Climate: Scale Development and Validation. Justin B. Craig with Don Neubaum, Chris
Thomas and Clay Dibrell. Under review at Family Business Review.
STEWARDSHIP (and Trust)
To build a Trusted Team of
Decision-Making Teams consider:
(1) Trustworthiness (I & ABC)
(2) Stewardship Climate
The Team of Decision-Making Teams
are STEWARDS…
..of WHAT?
The Team of Decision-Making Teams
can be STEWARDS…
...of Emotional Assets…
ROEA = PRIDE
The Four Kinds of Tests (in FM&O)
Test
Qualifying
Self-Imposed
C i rc u m st a n t i a l
P o l i t i c a l
Description
The Four Kinds of Tests (in FM&O)
Test
Description
Qualifying
Self-Imposed
C ircu m sta nt i al
Polit
ical
…are assessments based on tangible (and, ideally, impartial)
measurements of performance, including: schooling, work
experience, track record of accomplishments, awards, etc.
The Four Kinds of Tests (in FM&O)
Test
Description
Qualifying
…are assessments based on tangible (and, ideally, impartial)
measurements of performance, including: schooling, work
experience, track record of accomplishments, awards, etc.
Self-Imposed
…are assessments based on the expectations the leaders themselves
set when they publically commit to certain objectives or levels of
performance through strategic and business plans, set budgets, or,
simply, when they make promises to do certain things and behave in
certain ways.
Circu mstantial
Polit
ical
The Four Kinds of Tests (in FM&O)
Test
Description
Qualifying
…are assessments based on tangible (and, ideally, impartial)
measurements of performance, including: schooling, work
experience, track record of accomplishments, awards, etc.
Self-Imposed
…are assessments based on the expectations the leaders themselves
set when they publically commit to certain objectives or levels of
performance through strategic and business plans, set budgets, or,
simply, when they make promises to do certain things and behave in
certain ways.
Circu mstantial
…are assessments of competence based on how a leader copes with
the unexpected, like: a financial crisis, a down turn in productivity, a
shareholder dispute, a labor strike, a family crisis, or a natural
disaster.
Polit
ical
The Four Kinds of Tests (in FM&O)
Test
Description
Qualifying
…are assessments based on tangible (and, ideally, impartial)
measurements of performance, including: schooling, work
experience, track record of accomplishments, awards, etc.
Self-Imposed
…are assessments based on the expectations the leaders themselves
set when they publically commit to certain objectives or levels of
performance through strategic and business plans, set budgets, or,
simply, when they make promises to do certain things and behave in
certain ways.
Circu mstantial
…are assessments of competence based on how a leader copes with
the unexpected, like: a financial crisis, a down turn in productivity, a
shareholder dispute, a labor strike, a family crisis, or a natural
disaster.
Polit
ical
…are assessments of based on how a leader handles challenges to his
or her influence from rivals who want to undermine the leader
C-SUITE
&
F-SUITE
MINDSET
&
SKILL SET
F-SUITE
&
C-SUITE
MINDSET
&
SKILL SET
TRUST
STEWARDSHIP
F-Suite
C-Suite
Skill Set
Mindset
TRUST
Next-Gen
Now-Gen
Business
Governors
Family
Governors
Integrity
Ability
Benevolence
Consistency
TRUST
Integrity
Next-Gen
Four Tests:
Qualify - Self-imposed – Circumstantial - Political
Now-Gen
Business
Governors
Family
Governors
Ability
Benevolence
Consistency
TRUST
Integrity
Next-Gen
Four Tests:
Qualify - Self-imposed – Circumstantial - Political
Now-Gen
STEWARDS who are intrinsically motivated…see the company as
an extension of themselves, use personal rather than positional
power in organizations characterized by collectivist cultures,
low power distance, and strong involvement.
Business
Governors
Family
Governors
Ability
Benevolence
Consistency
TRUST
Integrity
Next-Gen
Four Tests:
Qualify - Self-imposed – Circumstantial - Political
Now-Gen
STEWARDS who are intrinsically motivated…see the company as
an extension of themselves, use personal rather than positional
power in organizations characterized by collectivist cultures,
low power distance, and strong involvement.
Business
Governors
C-Suite Skill Set
F-Suite Mindset
Family
Governors
Ability
Benevolence
Consistency
TRUST
Integrity
Next-Gen
Four Tests:
Qualify - Self-imposed – Circumstantial - Political
Now-Gen
STEWARDS who are intrinsically motivated…see the company as
an extension of themselves, use personal rather than positional
power in organizations characterized by collectivist cultures,
low power distance, and strong involvement.
Business
Governors
C-Suite Skill Set
F-Suite Mindset
Family
Governors
F-Suite Skill Set
C-Suite Mindset
Ability
Benevolence
Consistency
Justin B. Craig, Ph.D.
Clinical Professor of Family Enterprise
Co-Director of the Center for Family Enterprises
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, Illinois, 60208
Email: [email protected]
Office: 847-467-1082
www.kellogg.northwestern.edu/familyenterprises