4 ways family businesses can lead the pandemic recovery

• COVID-19 pandemic has revealed an intergenerational crisis and urgent need for a better model of capitalism.
• With its long-term vision, stewardship, and values-driven strategy, the family business model can be part of the global solution.
• Economic recovery requires a more resilient and sustainable model that measures value and externalities holistically.

The COVID-19 pandemic has profoundly changed every aspect of our lives. Amid the short-term public health and economic crisis, it has also exposed an intergenerational crisis, putting the long-standing divisions and imbalances of our economies and societies into sharp focus.

This unprecedented challenge has been a moment of global awakening. Our past economic and social systems, driven by shareholder primacy and short-term profit maximization, is in question. In this context, society at large demands action toward a more resilient, equitable and sustainable economic, societal and environmental model.

How businesses have responded to the disaster has proved that a more principled management philosophy exists. A particular form of organization—family-owned businesses—when well governed and united around purposeful owners, possesses the right ingredients for a responsible business model.

The agriculture and food giant (also the largest privately held business in the world) Cargill has established a $15 million fund to support employees around the world during times of disaster. Adriana Cargill, the great-great granddaughter of the founder has championed this initiative and rallied family owners to financially support the fund. “My ancestors founded this company, but it survives because of our people,” she says, “we have a responsibility to support those who have supported us.”

Similarly, the Belgian chemical company Solvay has created a solidarity fund to support their employees affected by the crisis. Solvay’s extended senior leadership team voluntarily agreed to forego 15% of their half-year salary to contribute to the fund. Nicolas Boël, Chairman of the Board and family member, has contributed 50% of his annual salary. The families, who are represented by over 2,300 shareholders, agreed voluntarily to contribute one-third of their final dividend towards the fund.

Family businesses are one of the oldest and widely represented form of organizations, ranging from small corner shops to household names like Swarovski, publicly listed companies like Walmart or privately held like Mars. Some of the family businesses have been pioneers in stakeholder practices and have been operating under strong ethics for years.

The Chinese “Yih-Jong” (mansion of righteousness), originally established by the Fan family in 1050 to systematically support clansmen and local communities, is one of the earliest stakeholder models and was subsequently followed by numerous prominent business families over several centuries. The same value-based principles are found in the 19^th-century British Quaker business families, who prospered under the conviction that business is an extension of the family and a deep sense of responsibility toward the workforce, local community and society.

Read more: www.weforum.org