Joseph H Astrachan is executive director of Cox Family Enterprise Center, and Wachovia Eminent Scholar Chair of Family Business at Coles College of Business, Kennesaw State University
In this time of economic and social turmoil, perhaps we should be looking toward the stabilising influence of family businesess for solutions. On 31 July, the third-generation banking Dierberg family put substantial assets into their business, First Bank, to protect not just their company, but the many communities and families they serve.
Losing money for several quarters due to worsening economic conditions and the subprime lending crisis, rather than selfishly taking resources from their company, they chose to reinvest to protect others. This admirable move, which is characteristic of many family businesses, underscores their integration into the communities they serve.
Let's take a closer look at the Missouri-based Dierberg family, their citizenship, and what this might do not just for their employees, customers and communities, but for the family unity as well.
First Bank is not a small bank. It is a national bank with 217 locations in five states. The bank has over $10 billion in assets and more than 3,100 employees. It has been growing at 13% per year and has deep roots in its communities.
In 2006 the company's philanthropic giving was in excess of $33 million and more importantly, it totalled well over 5,000 hours of volunteer work. In the company code of conduct it expressly encourage employees to be active in civic endeavors.
First Bank's strategy includes catering to underserved and immigrant markets and it annually generates well over $100 million in community development lending. Clearly the Dierbergs have had a history of caring for and developing their communities.
What insights can we gain into their family dynamics? We know that they have had some positive family relations. Another branch of the family owns a successful fourth-generation chain of grocery stores, Dierbergs Markets, and unlike many families, these two cooperate quite well as indicated by the many collocated banks and markets.
A further indication is this quote taken from the First Bank website describing the family nature of the bank: "Dierberg guarantees that the bank is not for sale." The chairman and chief counsel are both members of the family.
This all points to a careful cultivation of pride in the bank and its activities which bodes well for long-term family commitment and a desire to do good more than to grow personal wealth. This is the kind of compelling family mission that helps maintain family unity for generations.
It is very likely that the family's investment in the bank during this time of trouble reflects its commitment to the bank. The investment, which maintains jobs and communities, also builds pride and commitment among family owners.
First Bank and the Dierberg family are exemplars of why family businesses are to society and the economy like coral reefs are to the oceans. Family businesses are great forces for individual and community development.
They do not abandon their larger kin and communities when times are difficult; rather, they tie their fate to the fate of their communities and struggle for survival and success in partnership with their many stakeholders.
Their owners are not, by and large, people of great disposable wealth which they spend on frivolities. Their wealth is productive; having positive impact on large numbers of people.
Our governments should protect and nurture them as they can be relied upon in times of crisis. Rather than tax them through onerous estate or other tax schemes, governments would be wise to craft carefully constructed incentives to help them do what they are wont to do already: protect, grow and develop their families, neighbours, and communities.