Businesses Are Not Families

Organizations of all types use the term “family” to describe themselves. In a time when loneliness is pervasive, this can be a heartfelt sentiment. It plays into our inherent need to belong to a group, our tribalism. But it’s also misleading and produces a false sense of security. It often does more harm than good.

How often have we heard companies refer to employees as family? In the push to improve corporate image and promote loyalty, the word family has been injected. Executives often say, “We are a big family here at XYZ Corporation,” or a hiring manager might tell a new hire “Welcome to the family,” as if a company could be one. It can’t.

This practice is pervasive—companies in every industry use it. Saying a company is a family is usually meant with good intentions to personify the company and illustrate its values. For example, many service firms are heavily reliant upon the quality and dedication of employees, and thus use the term family to show the employees that they are important. Despite good intentions, this seemingly harmless use of the word family can actually create a false sense of security. Family is everlasting, regardless of performance. Employment at a company is not. That false sense of security is detrimental to company culture because of the dissonance between language and action. You are saying one thing yet behaving counter to it.

Issues With Calling a Business a Family

First off, using the word family to describe a business only works in good times. We cannot stress this point enough. If the economy turns south and cuts must be made for the company to stay afloat, it doesn’t look like a family then. You don’t get to lay off or furlough family to meet profitability goals.

This phenomenon reared its head during the COVID-19 pandemic. A few months prior to the economic shutdowns in the spring of 2020, companies were big, happy, and productive families. Then entire industries shut down (or nearly did) and lay-offs abounded. The reported unemployment rate reached 15% at one point. What happened to being a family?

Ideally, a family faced with crisis comes together rather than looking to remove members.

Also, family members do not have performance metrics they need to meet or risk being cut. But companies do. In fact, some companies use the vitality curve model that Jack Welch pioneered in his days as CEO at General Electric. This strategy encourages business managers to fire the bottom 10% of their workforce each year in an effort to continuously improve and motivate employees to perform. While this method has critics based on its own merits, its practice is also contrary to what a family is and does. Yet, some of the companies who call themselves families use the vitality curve model! Imagine employee confusion and resentment from the mixed signals between what is said and what is done. It’s inconsistent. And inconsistency does not build trust.

Here is the issue: the goals of families and businesses are fundamentally different. A family is a unit, most often one sharing a genetic heritage; outside of adoption, members are not selected. Its purpose is to provide personal support and love. Performance at a task for commercial and economic purposes is not required. You do not get kicked out of the family because you are not making enough money for the family.

Businesses, on the other hand, have selective membership that is often reevaluated at will, which means the employer or employee can terminate the relationship at any time. Even contractual employment sometimes ends prematurely. And the primary goal of business is enterprising in nature. Whether developing a new product or providing a service, money—in the form of cash flow, shareholder value, etc.—is an integral part of a business’s operations.

Suggestions for Improving Dialogue

So how should we refer to companies? We still want them to be personable, but realize that everyone has come together to perform a task or set of tasks. That’s not a family; that’s a team.

This is how Toby Lutke, CEO of Shopify, approaches it. Toby issued a memo addressing the usage of family in Shopify after hearing team members call colleagues “Shopifamily”. A passage from the memo reads:

Shopify, like any other for-profit company, is not a family. The very idea is preposterous. You are born into a family. You never choose it, and they can’t un-family you. . . . The dangers of “family thinking” are that it becomes incredibly hard to let poor performers go. Shopify is a team, not a family

Netflix has a similar mantra on the culture page of their website. The portion covering the goal of having the company perform as a team states:

If you think of a professional sports team, it is up to the coach to ensure that every player on the field is amazing at their position, and plays very effectively with the others. We model ourselves on being a team, not a family. A family is about unconditional love, despite, say, your siblings’ bad behavior. A dream team is about pushing yourself to be the best teammate you can be, caring intensely about your teammates, and knowing that you may not be on the team forever.

Setting Team Expectations

Teams come in all sorts, so it’s up to the leaders to effectively communicate the type of team the business is. Some teams are exceptionally high performers where underperformance and lack of qualifications carry the risk of global catastrophe. Think heads of state, special operatives such as Navy SEALS, and the like. On the other end of the spectrum, there are teams following pursuits that don’t carry great risks. These include amateur sports teams and leaf removal companies. And then there is every sort of team in between.

Obviously, these different teams require different skillsets and mindsets. While team is the correct category for a business, it is vague. It requires further classification of what type of team it is. Expectations need a refined definition.

Calling a business a team is only the starting point of clarifying the purpose and goals of the organization. It’s easy to stop at a correct classification, even if it’s vague and conjures different meanings to different people. But doing so is only moderately better than an incorrect classification.

Families are Teams

Here’s another interesting thing to contend with: families are teams.

Think about this like how geometry is taught. A rectangle is a shape with four sides at right angles where the opposite sides are equal in length. A square meets this definition: all sides are equal in length so that means opposite sides are equal. Therefore, all squares are rectangles but not all rectangles are squares.

Similarly, a team is a group of people who work together for a common goal. Families do that, oftentimes their goal being to support and love each other. Other types of teams have different goals. A professional football team might have a goal to win the Superbowl. A widget company could aspire to grow its market share above 10%. These different types of goals still fall under the domain of teams, but not families. Therefore, all families are teams, but not all teams are families.

Conclusion

In the end, businesses are not, and cannot, be families. As Toby Lutke said, the very idea is preposterous. Even though the idea might come from good intentions, the long-term effects of embracing it are detrimental to company culture. And a company with a poor culture is a company poised for poor long-term performance.

A team—while being a much better descriptor for a business—is a broad construct used to describe people coming together to achieve a common goal. Identifying a business as a team is merely the first step in the right direction of clearly laying out what the business actually is. The next step is setting clear expectations for the team and its members. Then the team has to execute. That’s aligning rhetoric with action.

Overall, we must think about what our goal actually is. As business leaders, we are trying to create an environment where people feel like they belong and can contribute. This is why it’s tempting to describe the group as a family. But employment is not guaranteed: it is earned and re-earned constantly by both employee and employer. When we treat business in this matter, we more clearly understand what is needed by both sides to make the team work effectively. Businesses that do this increase the odds of succeeding in the long term. Businesses that don’t might not even survive to see the long term.