PEOPLE WHO KNOW ME have heard me speak often enough about the importance of love and faith to ensuring harmonious continuity in family businesses. To many business owners, their religious faith is a powerful source of inspiration and guidance. Whether Christian or Jew, Catholic or Protestant, successful business owners usually accept a strong sense of responsibility to their Creator for their actions here on earth. I’ve yet to hear of an atheist whose business survived in his family long after him.
I have also come across families whose sole reason for being in business seems to be to support their religious mission. These companies are run virtually like religious foundations. Prayers, rules, rituals, and other religious observances are woven into their business routines and practices. They may give preference to members of their own faith in hiring practices. They may want only coreligionists on their board. It would seem they run their companies not only to provide funds for church and missionary work, but also in direct economic support of wide-ranging political and social activities appropriate to their beliefs.
There are a fair share of these “faith-first” businesses, and I admire their zeal. If their shareholders agree to putting their moral mission before their economic profit, they have every right to do so. When God and Mammon are so closely intertwined, however, it raises troubling questions about the proper role for religion in business.
Religion can become terribly divisive when it is taken to cultlike extremes. When managers of a business believe their decisions are sanctified by their religious convictions, they may alienate others who disagree with them. When a group of minority zealots seem to want to burn other people in their business community at the stake for failing, in their eyes, to live up to the “one true faith,” obviously this company is headed for a destructive holy war.
In a well-run family business, there is no room for either ayatollahs or terrorists. Nor can a moat be long maintained around a family business that ignores or denies societal change. Some may be able to get away with hiring only “their kind” — companies do it despite antidiscrimination statutes — but often at the price of cutting off the company from valuable talent or resources. Same goes for limiting a company’s choice of directors to members of a single faith; you may feel most comfortable with people who share your religious beliefs, but will they bring to the table the diversity of viewpoint, the strategic perspective, and specific business skills you need? Do you really want only people who agree with you on your board?
Religious faith benefits a family business when it imparts a strong purpose and unity to the members and results in fair treatment of all the stakeholders. God is assumed to be fair in most religions, and the patriarch in a family is assumed to act in the image of the Creator — that is, his actions will be fair. But just as excessive greed or obsessive ego needs can destroy a company, extreme religious beliefs can squelch the collaborative give-and-take necessary to keep a sound business competitive.
I question whether any religion can determine the best methods to achieve success in business. Nor can one’s faith provide the only framework for judging the decisions and policies of the leaders. One of the things that sets family controlled businesses apart is that they have more freedom to infuse their goals with moral values. Public corporations must respond to the demands of armslength shareholders who invest for monetary gain, pure and simple. While some stockholders of public companies may withdraw their investment on principle (for example, if the corporation is exploiting cheap labor, violating the environment, or supporting a racist regime overseas) in the main they want to see a return on their money, not support a cause.
Family companies have the luxury of running their business in a way that furthers the moral or religious principles of their owners. With the help of the tax code, owners of family businesses are quietly active in a wide-ranging array of philanthropies and social causes of their choice. They don’t wear their religion on their sleeves; they carry it in their hearts. They don’t cheat their customers because that would be wrong. They are unstintingly devoted to product quality and fairness in dealing with business associates because it is right. A shared belief in God can also bind business families and their varied stakeholders together. It can create a sense of trust, a sort of mutual pledge that our business dealings together will be worthy of God’s approval.
For those who accept the Creator as the ultimate judge of one’s spiritual destiny, a strong board of directors, with a majority of qualified outsiders, fulfills a similar function as the ultimate judge of our business destiny. Owners with such a board know they are responsible to a higher power that judges and must approve everything they do. When owners know that directors they chose — people they respect and admire — are watching their actions closely, they try to be worthy of them. Most good people are willing to be judged. That’s the basis of every religious faith. It is also why, in my experience, most emotionally secure and moral business owners will seek to organize such boards, for true review and for encouragement.
The business family that wishes a clear moral as well as economic compass is well advised to define its principles in a mission statement and to review it on a periodic basis. The statement can be as elaborate or as simple as the family desires. One Irish-American family business wrote its mission statement largely around one principle: the Golden Rule. This particular family was strongly Catholic, but in their business activities the members preached tolerance and fair dealing with all — exactly what they expected of others in dealing with them. And God help you if you were on their board and did not understand this.
Léon Danco is the founder of the Center for Family Business in Cleveland and the author of four books on family business.