Weathering the Storm: Why Family-Owned Companies Have Fared Better During the Pandemic
In my work advising and serving on boards I’ve had the opportunity to observe many companies before, during, and after the pandemic—and I have seen some patterns emerge. Some companies will come out of COVID stronger than before; some companies will just make it through but not necessarily thrive; and some companies simply—and unfortunately—will perish. What makes the difference between those who founder and those who actually emerge stronger after the crisis? Why are some companies more resilient than others?
Companies with a strong and clearly articulated “purpose” and an iron-clad set of values have not only made it through the storm, they are on course to grow and flourish. It turns out these concepts are not just buzzwords; they provide a blueprint for what fosters growth and innovation. A strong and clearly-articulated mission and set of values allows for decisions to be made quickly and accurately in the field, based on the simple question, “Is this decision in keeping with the company’s core values?” If not, it’s the wrong decision. In other words, rather than having to check every move with one’s boss and wait for that boss to then clear it with his/her boss and so on, many decisions can be made, with confidence, quickly and independently. This gives the company the critically important attribute of agility, a key element of growth and a factor that goes hand in hand with adaptability.
In the words of Leon Megginson, often misattributed to Charles Darwin, “It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.” Put more bluntly: companies who are rooted in purpose are much more adaptable and better positioned to win the battle of survival of the fittest.
This clarity of purpose has helped especially with the myriad choices over the past 18 months between “people” and “profit.” For an airline struggling to stay afloat, do you mandate open center seats when every seat sold leads to more revenue? If you care about your employees and your customers, yes, you do. For a retailer who switched to fulfilling orders exclusively online because all stores had been closed, what do you do when someone at the distribution center tests positive for COVID? Do you temporarily shutter the facility and require workers to quarantine or do you continue to fulfill orders? It’s not an easy question. (This second fact pattern illustrates another attribute of agility: redundancy, or the importance of having more than one distribution center.)
The focus on values and people first is reflected in one of the most prevalent and important socio-economic trends in consumer spending today: the rise of the “purpose-led consumer.” Today’s consumers, especially Generation Z and Millennials, are increasingly likely to buy from a company whose values align with theirs. Research shows that these consumers are actually more likely to pay more (i.e., accept a higher price) for the same product, whether the product is clothing, groceries, or even insurance. So when purpose, mission, and values are real and are evident to employees and consumers, they drive not only agility, but also revenue.
This is all especially good news for family-owned companies, which are more likely to have a strong set of values that are woven into the fabric of the company. The employees, quite simply, are an extension of the family. I have heard over and over again “we’re all one family” when advising and serving on the boards of family-owned companies. Questions around decision-making become, “What would John do in this situation?” when John is the patriarch or family head, or “What would Susan do?” when the family head is a woman. The purpose and values may be on a piece of paper on the bulletin board at every manufacturing facility, every store, every conference room—but they are also embedded in the minds of every employee, every “heartbeat," as one of my favorite family company CEOs refers to each of his employees. Decisions come easily…. and they come quickly… and they are the right ones.
It’s a lesson that all companies could benefit from taking to heart: thoughtfully- established, clearly articulated, and consistently applied purpose, mission, and values lead to quick and accurate decisions. This, in turn allows companies to quickly pivot to weather crises—from an emerging competitor to an economic downturn to a global pandemic. And agility leads to adaptability, which leads to resilience. Private companies, especially family-owned companies, are more likely to possess this attribute of resilience, which makes it more likely that each of them will come out of COVID stronger than before.
D’Anne Hurd serves on and advises boards of public, private, and family-owned companies in a variety of industries. She also serves as an independent mutual fund trustee. Hurd is an audit committee financial expert and an authority on environmental, social, and governance issues and currently serves on the boards of Pax World Funds, Peckham Industries, and Martin Engineering. She is a member of NACD’s Board Advisory Services’ faculty and a frequent speaker at NACD events.
D’Anne Hurd serves on and advises boards of public, private, and family-owned companies in a variety of industries. She also serves as an independent mutual fund trustee. Hurd is an audit committee financial expert and an authority on environmental, social, and governance issues and currently serves on the boards of Pax World Funds, EILEEN FISHER, Peckham Industries, Inc., and Martin Engineering, Inc. She is a member of NACD’s Board Advisory Services’ faculty and a frequent speaker at NACD events.