Tarja Valde-Brown is senior communications consultant and deputy managing director at Eurofacts Oy, a Finnish public affairs and communications agency operating in the Baltic Sea region. Terhi Ikonen is communications assistant at Eurofacts Oy, part of Fleishman-Hillard global communications network.
Sustainable development, corporate citizenship and the transfer of tradition and positive family values: Finland's next generation entrepreneurs explain their understanding of responsible ownership
Responsible ownership has been emphasised in public discussion recently. Are more expectations directed toward family businesses than to other firms? Is it easy to fix expectations with respect to an identifiable owner?
"Responsible ownership in a family enterprise means – as in other companies – risk management in decision-making. Via ownership, this also means taking responsibility for the surrounding community and the employees," says Johanna Ikäheimo, a second generation member of the family company Lappset Group Oy.
"This is an important concept at Lappset, evidenced by the fact that half the company's profit goes to taxation and about 15% of the profits are distributed annually to employees. Aside from taxes and other legislated payments, 1% to 2% of yield is donated to some community good," explains Ikäheimo. "We're involved in developmental work in various advisory committees belonging to our areas of operation. We take care of a lot more than just our own business functions. Our commitment to the immediate environment is very strong."
Ville Voipio, a fourth generation member of the family business Vaisala Oyj, sees the matter in much the same way: "To a company, responsible ownership is the same as sustainable development is to the planet. A responsible owner takes care of his interest groups in addition to his enterprise, so that the firm's operational prerequisites and environment remain favourable in the future as well. Responsible ownership is perhaps easiest to identify by its opposite – the 'take the money and run' way of thinking."
"The owner's responsibility focuses primarily on continuity," points out Torkel Tallqvist, a sixth generation member of his family's business, Oyj Hartwall Abp. "The owner must be responsible for ensuring management functions in a manner that ensures the continuity of the enterprise. In family-run companies, perseverance receives more emphasis than elsewhere. From the 'corporate citizen' perspective, ownership with a sense of responsibility generally means action in keeping with values that are accepted and agreed on – for instance, taxation-related responsibility and other obligations."
Placing emphasis on taking responsibility in business operations is an idea that has come up particularly during the last few years. Ikäheimo, Voipio and Tallqvist all see the matter in a similar way. A sense of responsibility has been emphasised as a response to the idea of making money by any means possible and fraudulent activity. These unfavourable topics have promoted discussion on ethics and morality, and it seems that at least Finnish family businesses are ready to enter the conversation.
"Responsibility is spotlighted as a counterforce to irresponsibility," says Voipio. "In recent years, going after a very short-sighted sort of self-interest has been diligently broadcast in the news. Under these circumstances, one must speak up for responsible ownership as something that has self-evident value."
Family values grow
In family firms, family values often go hand-in-hand with the concept of responsibility. And for many next generation members, growing up alongside the family business helps the transfer of positive family values from one generation to the next.
Ikäheimo relates her experience: "I was only two years old when my parents established the company. As such, the values of our family business have been communicated to me mainly by following the way my parents work. As an adult, I've been working with my father and had some 'value discussions' with other members of the family, too. I believe that values will be transferred on to the next generation the same way.
"My own son, who's four years old, often goes with me to the family firm. He's already taken part in quite a few playground equipment tests and advertising photo sessions. He's also growing up closely within a family enterprise sort of atmosphere."
Voipio corroborates this in almost exactly the same way: "The transfer of traditions and values doesn't succeed by merely talking, especially if actions and words do not correspond to each other. We need practical deeds and activity."
Voipio also notes that not everything old should be uncritically turned over from one generation to the next. Renewal requires redefinition of values from time to time. "Not all traditions and values should be put on to a pedestal. Old standards and values can lose their significance and new ones take their place," he reasons.
For Tallqvist, Hartwall has always been a part of his life. However, he admits: "In taking on employment in a family business, many things came to me as a surprise. Now that I'm exerting influence elsewhere, I try to act as a support to the other family members who start working at the company. I also try to educate my children to understand the pleasure Hartwall products bring to life and, through that, encourage them to commit themselves to the continuation of this family company.
"The most important value emphasised among my relatives would seem to be continuity. The general way of thinking has developed towards the idea that continuity should not be severed. There has been discussion about traditions within the family and we've also made use of family business consultants to help out.
"I represent the sixth generation: my children are the seventh generation. Our family is therefore quite wide and the cultivation of mutual values is a highly demanding task. Mutual values are also maintained through freely structured activities, such as combined traditional suppers and factory visits."
Ability and motivation
Like values, the choice to work in the family business should be discussed – not merely taken for granted. "Under no circumstances should family entrepreneurship ever be forced," warns Ikäheimo. "It's a good idea to make clear to the younger generation the possibilities and various alternatives within the family business for working. If the motivation is lacking and the decision just doesn't get made on its own strength, it's useless. I've actually experienced this myself.
"The other side of the coin is, of course, the fact that a family enterprise may not even be able to provide everybody with a job. Interest and ability generally resolve who gets involved. In many respects, working in a family firm shouldn't be something that's taken for granted," continues Ikäheimo.
Tallqvist also feels the same way. "A career in a family company is never a matter of course," he says.
For Ikäheimo, the question of whether to work in the family business first arose when she was 18 years old. She came to the resolution that there was no reason to assume that she would ever involve herself with the family enterprise. Almost 10 years went by before she reconsidered, during which time she studied, lived abroad for a few years with her husband, returned to Finland, became a mother and noticed that her ideas had changed.
"Thinking about it afterwards, I can see that it was a certain kind of process of independence in which I wanted to break free from both my parents and the family company so I would be able to come to my own solution. As I got a little older, I started thinking about what my real values are," explains Ikäheimo, describing the psychological growth she went through before becoming a family entrepreneur.
This pattern has repeated itself in Ikäheimo's family three times in a row. The youngest of her siblings is still studying, so time will tell what kind of solution waits around the corner. "I think we've all realised what a great thing family entrepreneurship and building up the company is. The arrival of a family member in the business is not just a routine procedure – nor is a career in a family firm just an obvious fact of life," she explains.
"Compared with those coming from outside, a member of the family frequently has to demonstrate what he or she knows, as well as a commitment to the job many times over. The need to show your skills is much greater than for outsiders. Personal ambition is decisive. Simply wanting to do it isn't enough, if your own capabilities are insufficient. Family entrepreneurship with a sense of responsibility is also connected with being bold enough to look into the mirror and admit that your own abilities or commitment may be inadequate for working in the family business.
"Critical discussion should also go on within the family in regard to career paths – it's not enough that the oldest son is simply chosen to continue the company if his personal attributes and know-how are inappropriate for the job. The benefit of the enterprise must be put before any personal advantage.
"Also, personal family matters and those of the business should be kept separate from each other. Reason and the heart may take slightly different roads, but you have to know how to use both. Many businesses have collapsed because insufficient attention has been given to these matters."
Voipio says: "Motivation is born within the individual – it can't be instilled from outside. On the other hand, motivation can be ruined as a result of external pressure. You can get the best possible outcome by avoiding any destruction of motivation and by keeping adequate knowledge and capability available for the succeeding generation to aid in their own decision-making. In a future without alternatives, it's difficult to motivate people. If the future is ready-moulded, independent from one's own actions, trying to get ahead or fighting against something loses its meaning."
He concludes: "If your heart's going to be in the thing, the choice has to be your own – with no pressure applied."