Roland Dürre
Monday June 13th, 2011

The Interests of the Enterprise Have Priority!

At last week‘s RISE workshop in St. Gallen, I watched a wonderful presentation on „Multi-Generation Enterprises“. Among other things, the administrative board chairman and former CEO of a family enterprise in the seventh generation described „seven rules“ necessary for the existance of a family enterprise that is intended to last through several generations.

The frist rule is:

“Luck!”
That is a statement I find honest and well said. Because without luck, life is doomed anyway – at least in my opinion. But another rule is:

“The interests of the enterprise always have to come before the family interests!”

Now that is something I cannot accept without reservations. Some strange ideas come to mind:

What would happen if – as a dialectical game – I were to modify the sentence and replace the term „family“ by the term „share holder“? Now that makes for a totally different scenario. Doesn’t it? Incidentally, replacing the one term by the other is totally legitimate. After all, in this context, the family is just a special case but still nothing other than one or the only share holder.

The sentence will get even more exciting if I replace „family“ by „management“ or even by „employees“. Why don’t you try and just murmer the sentences to yourself when nobody is listening?

You will find that it is still correct. Because when all is said and done, everybody will benefit: shareholders, board of directors, managing director and employees are all important stakeholders. They all benefit from a long-term, sustained development of the enterprise.

To be sure: I readily admit that the ones I mentioned last (employees) are a group where you have to balance between the interests of the employees and those of the enterprise more carefully than, for example, when you are talking management or shareholders.

But the same might be true for more stakeholders of the enterprise, such as the municipality where the enterprise is located. Here, too, the interest of the enterprise must initially have priority over that of the municipality, because without the enterprise, there would be no jobs, no added value and not business tax. Incidentally, I would say the same restrictions have to be considered as when talking employees: there has to be a very careful and social (ethical?) balancing of values.

It would also be quite exciting if an externity balance were part of the evaluation of an enterprise. Various dimensions (physical, social, material) should be part of such an evaluation. And with all these considerations in mind, I finally arrive at a totally different meaning of the word “enterprise” than the one that is usually used in the classical sense (which I often criticize).

RMD
(Translated by EG)

1 Kommentar zu “The Interests of the Enterprise Have Priority!”

  1. Chris Wood (Monday June 13th, 2011)

    Hi, Roland, how strange! You start out about how the success of a business depends on neglecting one’s family. Then you generalise this into neglecting all owners. Then you suddenly justify this by maintaining that this is anyway best for the family, (etc.). So perhaps the family really matters most for you? I thought at first we could have an interesting ethical discussion, and I could ask you just when IF became more important to you than your family. But in the end it seems that you have done everything right.

    More interesting then is the question whether it is really good for a family firm to survive for many generations. There is the risk that later generations will come under pressure to continue to run it. Perhaps they could do something more worthwhile. Probably other people could run it better. It was good for Nokia to start producing mobiles instead of rubber boots. But a new start-up might have done as well, and anyway one hears about such success stories rather than the worse cases.

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