3 Tips to Creating a Code of Conduct For Your Family Business


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Codes of Conduct on YouTube

It’s a well-known secret that, sometimes, family members or other close employees within a family business don’t always communicate as well as they could and should. While some family businesses can grow and thrive despite these differences, there are others that are seriously handicapped by this toxic communication.

How bad can it get? If the behavior is extreme enough, it can fracture employee morale, which in turns affects your customer service, your productivity, and your ability to grow.

To overcome this obstacle, some family businesses turn to a Code of Conduct, which is a written document that articulates expectations of how family members (or other members of the business) will behave both inside and outside of the business. A code of conduct can address issues such as:

  • Communication challenges
  • Conflict management
  • Decision-making
  • Personal development
  • Information sharing

While a Code of Conduct is a great first step in improving the overall health of your family business, there are three key questions that must be resolved before starting the process, including:

  1. What is the goal of the code of conduct?
    Whether your goal is to foster better communication among family members, or to define roles and responsibilities, every participant in the code of conduct must understand the strategic goal behind it.
  2. Who is the code of conduct for?
    Your code of conduct must specifically articulate who the intended audience is, including the core family members, the owners, or for the rest of the company.
  3. What is the accountability for breaking the code of conduct?
    No plan can be effective without some measurement or accountability behind it, therefore, there must be some type of pre-agreed upon measure of accountability  if someone breaches the code. For example, one of our clients has a Code that requires the offending person to hand-deliver a hand written note of apology with a very nice bottle of wine to the person who was offended.

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Do you have a Code of Conduct in your family business? Are you considering one? If so, what other key questions must be addressed before initiating it? Please share your thoughts with us in the comments section.

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