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Trust in Business is Catalyzed by Family

We’ve often observed that trust is among the greatest potential competitive advantages of family businesses. Trusting relationships among participants in the business as well as between the business and its customers, suppliers and sources of funding can strengthen the organization in times of stress and render it more effective at finding and seizing opportunities. We find these trusting relationships more frequent and powerful in family firms than in other organizations. We also find family businesses ripe with mistrust.

Writing in Family Business Review (March, 1998), Kacie LaChapelle and Louis Barnes help to explain how trust is introduced and maintained in family businesses. Based on LaChapelle’s research, they observe that “relatively high and low degrees of trust...begins with family members who serve as a constellation of role models for other nonfamily employees. Organizational trust grows from these family constellations....”

No surprise here. But what was really interesting in their research was the extent to which a single individual within the family business system could function to establish trust as a transgenerational norm. Termed the “Trust Catalyst,” such individuals model trusting behavior, move beyond self-interest, project the interests and integrity of the family to non-family, and safeguard the rights of both. They personify character, competency, predictability and caring — the four relational characteristics that stimulate perceived trust.

“Trust Catalysts were often not the CEOs ...of the family business,” the researchers found. “Wives and/or mothers frequently take on this role, whether or not they participate formally in the business.” As we have often stated, family businesses require two CEOs: The Chief Executive Officer and the “Chief Emotional Officer.” The “Trust Catalyst” discovered by LaChapelle and Barnes may be our Chief Emotional Officer.

The researchers conclude: “Ironically, these Trust Catalysts are probably just as important in explaining both family and business success as are the most famed family business leaders who typically gain most of the public credit for the company’s success.” The culture of trust, while often catalyzed by those not involved with running the business, must be encouraged by those who do. When that occurs, trust as a value within the family can become over time, an important cornerstone for succeeding generations of the family business.

 

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