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Should Employers Treat Employees Like Family?

Jan. 20, 2016
It’s not an easy path but proponents say the personal and financial rewards are well worth it.

“We treat our employees like family.” It’s a proud statement heard from many business owners and managers, who equate it with a work environment that demonstrates caring for employees and which benefits from a cohesive, committed workforce. But is the concept dangerously paternalistic, a holdover from a society where constant change and adaptation wasn’t a dominant competitive requirement? Or is it a valuable tenet that deserves renewed attention?

Some worry that businesses have jettisoned the family concept for a disposable worker model, where, observes Will Hutton in The Guardian, “the new ownerless corporation with its tourist shareholders employs contractors who have to pay for benefits themselves and can be hired and fired at will.”

Such employers, warn human resource experts, lay the seed for constant turnover and low engagement. They ignore, Leigh Brenham wrote for the Center for Association Leadership, that “to be recognized, praised, and considered important is our deepest craving, yet 60% of employees say they feel ignored or taken for granted.”

While not everyone agrees with using the term family to describe the employer-employee relationship, many believe that the values of family life are applicable to the workplace.

“Employees who feel trusted and cared for are more likely to go to the mat for your business,” observes Leigh Steere, co-founder of Managing People Better, who says treating employees like family boosts employee engagement. “Most people want to live up to the trust and care shown them.”

Among the leading proponents of this philosophy is Bob Chapman, CEO of $2 billion global capital equipment and engineering consulting company Barry-Wehmiller and co-author with Raj Sisodia of Everybody Matters: The Extraordinary Power of Caring for Your People Like Family.

Chapman’s views on leadership changed in 1997 when he visited a South Carolina plant recently acquired by Barry-Wehmiller. He joined a group of employees who were animatedly discussing March Madness in the coffee area. As it got closer to the start of their shift, the air went out of the group.

“People are so joyful, vibrant and alive when they’re having fun,” he recalled. “Why can’t it be that way when they are working?”

When Chapman met afterwards with the customer service team at the plant, he suggested they create an incentive game – whoever sells the most parts in a week wins $100. The group raised a host of objections but Chapman insisted they give it a try. Thirteen weeks later, sales had gone up by over 20%.

Chapman: A leader's paramount obligation is the "well-being and development of the person being led."

Chapman soon gathered a group of employees to discuss the game and to share other experiences. A day and a half later, they had drafted a set of “Guiding Principles of Leadership,” with the motto: “We measure success by the way we touch the lives of people.”

Chapman came to view leadership as an act of stewardship for employees’ lives – a responsibility to help them discover and develop their talents and be recognized for doing so. While Chapman rejects his view of leadership as paternal, he argues that good parenting and good leadership “are virtually identical.”

“It is a mutually respectful and nurturing relationship that sees the well-being and development of the person being led as the leader’s paramount obligation,” Chapman writes.

A foundation of taking this family approach to company culture is trust, says Charles Krugel, a management-side labor and employment lawyer in Chicago.

“If you don't trust an employee, then management tends to isolate or ostracize that employee. Lack of trust can erode this family dynamic,” Krugel observes. “One basic fundamental of HR management is to treat employees as a capital asset that can increase, freeze or decline in value. Good managers trust their employees and increase the value of their employees. By treating employees as valued family members, in theory profits should increase.”

Those who argue against the “family plan” say it simply confuses two very different institutions and a failure to carry through on lofty statements can lead to a toxic work culture.

“I have heard more bitterness, even rage, directed at management, other employees and the company as a result of the false expectations such a policy raises than almost anything else,” says Michael D. Greaney, director of ESOP Administration Services at Equity Expansion International, Inc. “There is, for example, a tendency on the part of certain management types to assume they are the ‘parents,’ and the other workers are the ‘children,’ and must take whatever the ‘parents’ dish out, regardless how unjust.”

Perhaps the ultimate test of the family approach to business is when the business faces financial troubles.

“Every month I work with employees who thought they were members of the family until they were laid off for financial reasons, or replaced by the owner's less-qualified blood relative. Often, those close relationships simply disappear,” says Joni Holderman, founder of Thrive! Resumes. “I counsel my clients that no matter how friendly you are with coworkers, you still need a strong support system that will sustain you emotionally when you leave that job.”

Barry-Wehmiller faced such a test during the Great Recession. Chapman had thought its existing sales would cushion it sufficiently during the downturn but when customers started to cancel orders, he knew belt-tightening was required. Rather than resort to layoffs, which he felt would “devastate” employees and their families, Chapman and his team decided a family would respond with “shared sacrifice.” The company instituted four weeks of unpaid furloughs for employees, restricted travel and suspended executive bonuses and the 401(k) match. Chapman took a pay cut – from $875,000 to $10,500.

Barry-Wehmiller’s business recovered after nine months, so well in fact that Chapman had the company restore the lost 401(k) benefits.

“’Walking the talk’ during this tough period did more to convey our beliefs, strengthen our culture and cement our people’s loyalty than anything we could verbalize or proclaim through a framed vision statement on a wall,” Chapman concludes.

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