Loyalty and romance in family businesses

Image: Campari

Image: Campari

It is often said that customers like family ownership. It inspires trust and loyalty, especially if the owning family’s name is also the name of the business. But there is another kind of loyalty that family businesses create: loyalty among their staff.

A strange feature of family businesses is that multiple generations of families not related to the owners often work for the business. We recently wrote about Flavahans, an Irish milling business, where four generations of some families have worked for the business.

Thyssen Krupp, the huge German steel and chemicals conglomerate which was controlled by the Krupp family until it reduced its holding in 2013 (they still own about 20%), boasts that three generations of one family works side-by-side at their Sao Paulo plant, while members of seven generations of another family have worked there.

It’s often said that there is a “social contract” between employers and employees at a family business, and it is not uncommon to hear about family members paying hospital or lawyers’ bills for employees.

There is some evidence that family firms are better places to work. Research by the British Institute for Family Business found that employees at family-owned firms are slightly happier than those in non-family firms. For example, 55 per cent of employees at family firms strongly agreed or agreed that managers can be relied on to keep their promises, compared with 49 per cent of employees in non-family owned businesses.

And 78 per cent of employees in owner-managed family businesses strongly agree or agree with the statement “I feel loyal to my organisation” compared with 74 per cent in non-family owned businesses. The numbers were only slightly higher at family businesses, but there were higher for every question asked.

It might not be all that surprising that several generations of families work for manufacturing firms in places where there probably isn’t much alternative work. But is there sometimes more to it than a cold economic calculation? Family owners surely feel some sort of comradeship with families of employees. 

Take the case of Bob Kunze-Concewitz, the Austrian, Istanbul-born CEO of Italian drinks group Campari, which was founded in 1860 bought from the descendants of Gaspare Campari in the 1970s by the Garavoglia family.

Kunze-Concewitz’s grandfather was a salesman for Cinzano, another Italian drinks brand that was bought by Campari in 1999, six years before he joined the firm. It would be nice to believe that there was a bit of romance in his appointment - on both sides.