By Alfredo De Massis and Emanuela Rondi
Building trust in family-owned companies involves overcoming challenges from overlapping family and business dynamics. Non-family employees often face a “glass ceiling” due to perceived favoritism and limited career growth. Strategies like transparency, inclusivity, fairness, and leading by example help foster a supportive environment where all employees feel valued and motivated in the family firm.
Trust is the cornerstone of any successful organization, fostering a cohesive and high-performing workplace. In family-owned companies, building trust presents unique and complex challenges. The overlap of family dynamics with business operations creates both opportunities and obstacles. On one hand, the involvement of family members often fosters long-term relationships and stability, with family members and long-tenured employees contributing to low turnover and continuity. In fact, in a family firm, employees are frequently viewed as part of an extended family, fostering a culture where personal relationships are valued. On the other hand, non-family employees may encounter a “glass ceiling,” where their career advancement is perceived to be capped by familial succession plans and favoritism. This perception of nepotism, coupled with a lack of inclusiveness and transparency in decision-making, can lead to feelings of alienation and erode trust. Addressing these concerns is essential to creating an equitable organizational climate where all employees feel valued and supported. Here are actionable strategies for family-owned businesses to build trust with their non-family employees.
1. Transparency
Openly sharing business goals and clearly defining family members’ roles prevents perceptions of favoritism. When employees understand the business’ direction and see that family involvement is balanced with meritocracy and professional qualifications, it reinforces a sense of fairness. Regular team meetings and open communication create opportunities for non-family employees to voice concerns and feel included, fostering a culture of mutual respect and engagement. Transparency also extends to clear performance expectations, evaluation criteria, and career advancement opportunities, which help eliminate uncertainties and build trust.
2. Inclusivity
Employees outside the family often feel overlooked for leadership roles or excluded from strategic decisions. Addressing this requires deliberate actions to create a more inclusive environment. Appointing non-family executives or creating advisory boards with a mix of family and non-family members sends a powerful message about valuing diverse perspectives and relying on independent perspectives. Equally important is offering clear career progression opportunities to all employees, accompanied by merit-based appraisals and professional development programs. When non-family employees see that their contributions are recognized and rewarded equitably, they are more likely to develop a sense of loyalty and trust.
3. Fairness and consistency
Family businesses must ensure that rules governing work hours, benefits, and performance expectations apply uniformly to all employees, regardless of their familial ties. This fairness extends to conflict resolution, where impartial mechanisms should be in place to address disputes. By demonstrating that favoritism has no place in the organization, family-owned businesses can cultivate a culture of trust and mutual respect.
4. Purpose
Communicating the family’s long-term vision and values is a powerful way to build trust with non-family employees. When the family purpose is articulated clearly, employees are better able to understand the “why” behind the business’s goals, helping them align their efforts with the overarching mission. This alignment fosters a deeper sense of belonging and commitment, as employees can see how their contributions directly impact the success of the family enterprise. One key outcome of sharing the family’s purpose is the development of “psychological ownership” among non-family employees, arising when employees start identifying with the business mission, values, and long-term goals, ultimately viewing themselves as integral to the organization, even without any formal ownership stake. When employees feel a sense of ownership, they are more engaged, motivated, and willing to go the extra mile for the success of the business. This shared sense of purpose bridges the gap between family and non-family members, creating a united workforce committed to a common vision.
5. Positive workplace culture.
Leaders in family businesses must try to engage with non-family employees on a personal level, showing genuine interest in their goals and well-being. Team-building activities and collaborative projects that include both family and non-family employees can bridge gaps and foster mutual respect. Moreover, prioritizing job security and stability by sharing clear succession plans and demonstrating financial transparency can alleviate concerns about the future. By communicating and reinforcing the family’s values and long-term objectives, family businesses can cultivate a supportive and motivated work culture where trust and loyalty flourish.
6. Leading by example.
Actions speak louder than words, and for non-family employees, seeing family members uphold the principles they advocate is crucial in building credibility. When leaders demonstrate consistency between what they say and what they do, it signals a deep commitment to shared values, helping to foster a culture of accountability. Treating all employees with equal respect, regardless of family ties, sets a standard that everyone can follow.
Integrity in leadership means being honest and transparent, particularly in difficult situations. Acknowledging mistakes openly, addressing issues head-on, and making ethical decisions, even when challenging, reinforces trust. Humility also plays a key role—family leaders who are approachable, willing to listen, and open to feedback create an environment where employees feel valued and empowered. This willingness to learn and adapt sends a strong message that the organization prioritizes collaboration over hierarchy.
By leading with humility, fairness, and integrity, family leaders can bridge the gap between family and non-family members, ultimately fostering a positive and inclusive work environment. Such an environment motivates employees, strengthens loyalty, and drives collective success.
Conclusion
Building trust with non-family employees in family-owned businesses requires intentionality and effort. By fostering these six key dimensions, family businesses can create an environment where all employees—regardless of familial ties—feel valued, respected, and motivated to contribute to the company’s success. When trust becomes the foundation, family-owned businesses can harness the full potential of their diverse workforce, driving innovation and sustaining their legacy for generations to come.
About the Authors
Alfredo De Massis is a Professor of Entrepreneurship & Family Business at the D’Annunzio University of Chieti-Pescara and IMD Business School, who serves as adviser to entrepreneurial families and policy makers.
Emanuela Rondi is Associate Professor at the Department of Management at the Università degli Studi di Bergamo (Italy). After graduating in Management Engineering, she got her PhD on Family Business Management from Lancaster University Management School (UK).
Alfredo De Massis and Emanuela Rondi are co-authors of The Family Business Book: A roadmap for entrepreneurial families to prosper across generations out now, published by FT Publishing
