In this post we distinguish four types of stewards from poor to great. Then we describe how we apply that understanding to the core practices and deepest values of successful multigenerational family businesses.
Our First Word: Stewardship
“Steward” is the first word on our website. It’s a verb, as in: “Steward a Peaceful and Prosperous Family Business for Generations to Come.” It’s the first word on our website because it’s the organizing principle of our work with you. Whether we’re helping you resolve conflict, develop policies and governance structures, navigate succession, or focus your giving, our goal is to help you – as a family – be good stewards.
Entrepreneurs as stewards
Why are we passionate about this? Because we recognize the vital role of entrepreneurs in stewarding creation for human flourishing. Saint John Paul II wrote in 1985: “The degree of well-being that society enjoys today would have been impossible without the dynamic figure of the entrepreneur, whose function consists of organizing human labor and the means of production in order to produce goods and services.” (Cited in this lecture on entrepreneurial vocation by Monsignor Roger Landry.)
What is stewardship?
Stewardship is the faithful and efficient management of property or resources belonging to another in order to achieve the owner’s objectives. Families who work with us are seeking to manage, faithfully and efficiently, the property, enterprises, and resources entrusted to them. Some family businesses are stewarded very well and thrive for generations. Others – statistically most – are not stewarded as well and never become multigenerational.
Four Levels of Stewardship
In a sense we ALL are stewards. Some of us are good ones, others, not so much. How to determine which is which? We like Kent R. Wilson’s model of four levels of stewardship: Accounting, Maintaining, Growing, and Optimizing. He suggests that a person or organization may progress from one level to the next as their understanding, commitment, and ability grow. (Of course, by the same token, regression is also possible.) Can you locate yourself on one of these levels? The illustrations below imagine a steward in the role of a shepherd.
Level 1: Accounting
“At the moment you have 40 goats.” No attempt is made to grow the owner’s current level of resources, or even necessarily to maintain it. Rather, the steward understands his role as simply giving the owner an accurate description of what he owns at the moment. Should the flock come under attack from predators, this steward is unlikely to put himself at risk to defend the flock; he will simply track the losses with accuracy.
Level 2: Maintaining
“Last year you gave me 40 goats to care for. I have fed them, protected them, and kept them healthy, so you still have 40 goats.” The mindset of this steward is maintenance – sustaining the status quo. The goal is custodial care, conserving resources at the current level in perpetuity.
Level 3: Growing
“Last year you gave me 40 goats, and I have increased the herd to 60 goats.” Growth was the dominant expectation of stewards in the time of Jesus. Growing the resources was the responsibility of each of the stewards in his Parable of the Talents (Luke 19:11-27). The master says clearly, “Put this money to work.” (v. 13) The steward with a maintenance mindset incurs the wrath of the master because he made no attempt to grow the resources entrusted to him. Had he made an attempt, the master might well have commended him, or at least recognized the effort, even if the risk taken hadn’t panned out.
Level 4: Optimizing
“Last year you gave me 40 goats, and I have increased the herd to 60 goats. But I also sold ten goats and reinvested that money by purchasing a cow.” Optimizing stewards are a great blessing to their masters. These stewards strategically manage resources for maximum return on investment (ROI). Optimizers are energetic, creative, entrepreneurial, and willing to take well-considered risks. They often receive even more to manage as a reward, in recognition of their expertise at getting results.
When we engage with a family, we aim to help them achieve Level 3 or Level 4 stewardship. But of what, exactly? Of the core practices of successful multigenerational family enterprises. Those core practices, stewarded for optimum impact, create conditions for a peaceful and prosperous family business across generations.
Six Qualities of Thriving Multigenerational Family Businesses
Dennis T. Jaffe has identified six qualities of family businesses that are well stewarded (see his book, Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises, pp. 25-26). As you read the list below, imagine how your family might grow or even optimize your stewardship of each quality.
Quality #1: Shared Values and Core Purpose. This is the framework of values from earlier generations that are defined, taught, shared, and used in all of the family’s dealings. You cannot be effective stewards without clear purpose. A simple but compelling statement of family purpose becomes the soul of your business philosophy.
Quality #2: Cross-Generational Engagement and Support. This involves building closeness, respect, trust, and connection across generations, and, in time, across branches.
Quality #3: Long-Term Business Development. These families see their enterprise as a foundation for their other activities, and they devote careful attention to a strong, growing portfolio of enterprises. Jaffe writes, “At some time, in the first or later generation, the family has to make a choice to transition from a family-first to a business-first orientation.” (p. 22) That is, they avoid the temptation to use the business primarily “as an employment agency, playground, or funding source” for family members.
Quality #4: Governance Policies and Structure to Guide Decisions. Family constitutions, forums, councils, and agreements provide clear, explicit, participatory structures that regulate and sustain family and business activities. “The best leaders of family businesses become students of governance.”
Quality #5: Education of the Rising Generation. These families see new generations as the human capital to continue to build upon their success. They start early and provide appropriate age-information on the responsibilities and opportunities of business ownership.
Quality #6: Commitment to Community Beyond Family. The wealth of these families is a gift shared with nonfamily employees, suppliers, and customers and with their community. Family values are applied to philanthropy and business policies supporting the sustainable flourishing of people, place, and planet.
4 Levels X 6 Qualities = Grounds for Celebration + Opportunities for Growth
The emotional weight of family business leadership is very significant. You may sometimes feel overwhelmed, lonely, and discouraged. We are here to help with that burden. When we apply the Four Levels of Stewardship to the Six Qualities of Thriving Multigenerational Family Businesses, we will be able to affirm and celebrate your family’s strengths while noting strategic opportunities for growth. We are committed to this good work, because we respect and appreciate yours. If we can help optimize your family business, request a no-obligation 50-minute Zoom meeting today.
