Managing diversity and building the image and reputation of a family business

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Managing diversity and building the image and reputation of a family business

Journal Title: Kwartalnik Nauk o Przedsiębiorstwie - Year 2018, Vol 46, Issue 1

Abstract

The objective of the article is to present the relations between the issue of building the image and repu- tation of a company and the concept of diversity management, determined by values and standards, fulfilled and developed with the attempt to managing human resources in the organisation. The article thesis reads: there is a relationship between building the image and reputation of a company, which is vital for the correct functioning of the organisation and the concept of diversity management. The Author points out to the importance of pro-ethical and pro-human behaviour in organisation management and its influence on building the value of the company. A significant role in creating the image and reputation of the organisation can be played by the concept of diversity management. Introduction A strong and ever-growing competition makes that companies demand more and more sophisticated employee skills. Their acquisition becomes a condition for an effective competition, not only when these entities present their offer on an international or global arena, but also – or perhaps above all – when they focus their marketing activity within their home country. - Competitive pressure is a phenomenon observed both on the market of products and services, where companies struggle for customers, as well as on the input market, where they try to acquire a variety of resources (financial, human resources , etc.). An important consequence of increasing competitive processes on both markets mentioned above is the fact that the activities in terms of shaping the image of a company take on a new dimension. These actions are addressed to – apart from the customers – other individuals and groups that make up the business environment. Entrepreneurs and managers become aware of the urgent need to produce strong, positive associations in the minds of a wide range of stakeholders, in particular its current and potential employees. Today, companies need to sell not so much a better-quality product or service, but a brand, which involves a promise of certain benefits. To create this brand, they must undertake actions to shape a specific image and opinions on the company. For a company with a known and positively assessed brand it is easier to acquire diverse human resources with appropriate competence and development potential, and it is also easier to build a loyal team. For employees the possibility to work for a “good” organisation is an additional benefit and a motivational factor. Open and tolerant working environment is a kind of magnet attracting more creative people to the company, who hope that in this place they will be able to realise their ideas. Attractive conditions of employment and an employee-friendly working atmosphere also foster retaining talents in the organisation. Companies also show an increasing interest in diversification of resources and relations with the external environment. Maximising of and profiting from diversity is a source of numerous benefits for the company, and these benefits apply not only to the sphere of human resources management [Gross-Gołacka, 2016]. With a skilful use of diversity as a value generator and a stimulator of desired behaviours among the members of the organisation, these companies may become more creative entities, more open to changes, may create marketing resources of key importance in competition, i.e. image and reputation. The main objective of this study is to clarify the essence of the concept of managing diversity and to draw attention to its participation in developing the capacity of a family business to compete. In the course of deliberations, the reasons for the implementation of the concept of managing diversity, interdependencies of the sphere of human resources management and marketing management of a family company are analysed. The author attempts to verify the thesis, according to which the diversity resulting from the presence of different generations in the team of a family business (i.e. people of various ages and varying professional experience) is an important determinant of the process of a family business image and reputation building. This feature may also directly affect the formation of specific associations and opinions about the company, and, thus, determine its competitive potential Business image It is easy to see that the most often listed (general) objective of public relations (PR) is shaping of a desired image or building reputation. For the needs of this article, these terms have been distinguished. The Latin imago means: prototype, pattern, image, notion, delusion, dream. Image, both in English and French means a picture or representation of a given person or organization. A popular definition used by public relations (PR) is the interpretation of J.E. Gurnig [2001, 1992], according to which an image is the idea of one or more audiences about a person or a company or an institution; it is not a real picture, precisely and accurately drawn, but rather a mosaic of many details, accidentally seized, fragmentary, with vague differences. In turn, Ph. Kotler [1994] writes that image is a set of beliefs, thoughts and impressions of a given person about the subject. A business image is an average representation of an economic entity created in its surroundings, consisting in reflecting in the minds of the members of these surroundings of groups of past and present components of the reality, directly connected with this entity. It is a collection of subjective associations and impressions of the audience related to a given company, which usually differs from the identity of the economic entity. In terms of marketing, the image is the sum of beliefs, attitudes and perceptions of a person or a group of people towards a particular entity. When classifying the image of economic entities, it is worth to expand its basic division, i.e. positive and negative image. The image is a subjective notion, i.e. it is understood differently by different audiences, often described as a long-term PR goal, evolving in time and requiring constant management. Therefore, there are several types of image [Wojcik, 2009]: • real (foreign) – considered to be a fair picture of the company in its environment; • mirror (own) – being the picture of the company among its internal stakeholders (members of the board and employees); • desired – presenting the target image of the company, which the company would like to create in its audience; • optimal – forming a compromise between the real, mirror, and desired image, which is achievable in the given market conditions. Building the image is closely connected with various activities regarding the promotion of the company, and its image is seen as a result of these activities, especially PR activities. It transpires from the previous considerations that the desired image of the organization depends not only on the factors inherent to the organization. The main determinants of the image, according to K. Wójcik [2009, pp. 755-756] are: • the state of the organization in its all aspects and manifestations; • communication about the state of the organization carried out by different subsystems of communication of the organization, not just PR; • social resonance – in groups of the organization’s environment, based on rational, emotional and social factors – public opinion shapes the image. Therefore, when speaking of the target image, that is of how the organization is perceived by employees, customers, counter parties, associates and other persons, it results from three groups of factors presented above that shape the formation of the image of the organization. Based on the background literature and the experience of practitioners, elements that make up the image of a “good employer” and make the workplace attractive and build ties and good relations with employees may be specified (Table 1). With regard to the activity of the organization aiming at building the image of a “good employer”, attention should be paid to the issue of assessment of the needs of employees and monitoring of the already undertaken actions. Monitoring of the environment of the organization is also important, which means obtaining information on what is happening on the market, so that the attractiveness of the organization remained at a high level. It is also necessary to make the offer of nonwage factors more flexible, if only from the point of view of different age groups for which different aspects are important. Definition of a family business A definition of a family business is not at all so much self-evident. The difficulty lies in the fact that there are no clear criteria that distinguish this group of enterprises, so that the companies of various legal forms, ownership, size and with various forms of management are included in it [Sułkowski, Marjański, 2009]. Anderson and Reeb [2003] say that a family business is a company, where the founder of the company or a family member is a manager or a director. Other researchers associate a family business with a company which follows the vision of business operation and which plans to transfer the company to subsequent descendants of the family in the future [Venter, Boshoff, Mass, 2005]. A family business is, thus, an entity owned by persons who are related, often parents and children. Such a company is managed by one of the owners, who employs family members. Hence, among the defining criteria that are most often taken into consideration, the criterion of ownership or management prevails. Marjański [2012] indicates that family businesses are characterized by the interdependence of the family of owners, participation of the family in the ownership of the company, both in managing as well as employment, a family system of managing human resources, awareness of the family character of the company, succession, family business culture or connecting the family and business in the company strategy. The cited definition highlights the most important features of family companies – from the point of view of these deliberations – which is the multigenerational nature and organizational culture (values). Business image and reputation The essence of the business image, based on its current, multidimensional image, being the result of a complex information content disseminated in external and internal environment, may be understood as synonymous with its reputation. Certainly, the image and reputation are a pair of interrelated structures. Reputation, according to Słownik Języka Polskiego (Dictionary of the Polish Language) [2003, p. 934] is an opinion on a subject that someone or something has among people. On the other hand, the image is a way in which a given person or thing is perceived and presented. Reputation may of course be good or bad, and the image, as mentioned earlier – optimal, desired, positive or negative. Both of these attributes may be improved or damaged. In other words, one could say that reputation of the company is the deepest, bipolar (positive or negative) core of connotations with the brand (mostly emotional), built using each element of the company’s business. Fombrun [2000, pp. 241-255] defines reputation as perceptual representation of the company’s activities and future plans, which describe its impact on key stakeholders in comparison with major competitors. This definition captures all elements of reputation: perception, history of actions, future expectations, influence on the environment and comparison with competition. The most complex instrument for measuring reputation (Reputation Quotient – RQ) was created by Fombrun [2000] with an American research company Harris Interactive. Harris-Fombrun Reputation Quotient indicates the existence of twenty determinants of reputation, which may be divided into six groups: • emotional experience (respect, trust, how much the company is liked and respected); • quality and innovation of products and services (their value and reliability); • financial and economic condition (competitiveness, prospects for development, risk); • vision of the company and quality of management (clear vision, strong leadership and the ability to recognize and use market opportunities); • attractiveness of the workplace (working conditions, whether the company is managed well, what it is like to work there, what are the qualifications and experience of employees); • corporate social responsibility (whether the company applies high standards in social relationships, social activities and for the natural environment). In the light of the above, the brand reputation may be created by both deliberate and intentional actions of the company, and it well may be the consequence of a number of unintended interactions of the same organisation, and its environment. The impact of opinions about the company and its brand on the purchasing decisions has been observed in the countries of Western Europe and in the USA for many years. Consumers can “reject” products that are known to be produced by a company which acts unfairly, e.g. mistreats its employees and disrespects human rights, pollutes the natural environment or is involved in political scandals. In extreme cases, consumer boycotts appear, when the consumer consciously forego the brands, which despite their good quality have a bad reputation. Similarly, consumers prefer to buy products from companies, to which they are convinced that they act honestly. An example of this is the phenomenon of the so-called fair trade. In some countries, there have been brands promoted which built their position on information that they act fairly, for example by using appropriate rates in cooperation with suppliers from third world countries. Although such conduct makes these brands more expensive, their users are willing to pay more for them. This indicates an increasing importance of the values recognized by the company in the decision-making process of consumers. The research of Fundacja Firmy Rodzinne (Family Businesses Foundation), conducted among 1,000 of Poles in 2014 shows that every eight person in Poland is ready to pay more, knowing that the purchased product comes from a family business. A majority of them declares that they are willing to pay even up to 10% more. Poles feel that the owners of family businesses supervise the production by themselves and watch over the quality of the product. For 52% of the people who have already had a chance to buy something from a family business, the most important was the purchasing motivation. The feeling that the product from a family business comes from Poland was second. This is the belief of almost the forth part of people who responded to the question why it is worth to buy from family businesses. In turn, every seventh of the surveyed is convinced that in such a company, employees are treated fairly. Moreover, the Poles asked to describe family businesses with adjectives create the image of a company which is traditional (almost 17% of indications), friendly (10.08%), and trustworthy (8.28%). For Poles, a family business is also small (6.58%) and reliable (6.38%) [FFR, 2014]. Managing diversity in the organisation Diversity may be described as a feature of what is considered to be diverse. Diversity is determined by a range of features that differentiate the objects qualified to the same category. American researchers, M. Loder and J.B. Rosener [1991], distinguished two levels of shaping differences: primary and secondary. Six basic primary aspects of diversity of human individuals, appearing in scientific publications, should be mentioned: age, ethnic origin, sex, physical characteristics/abilities, race, and sexual orientation. Whereas the secondary dimensions of diversity tend to be less visible, may be less important in human life and are easier to be changed. These features may be changed, and they include: education, language, physical appearance, marital status, lifestyle, system of values, view of the world, attitude, ethics, and take into account the psychosocial aspects [Griggs, 1995; Thomas, 2002; Car-Ruffino, 1993; Triandis, 2002]. This approach shows that in reality the diversities cannot be easily determined in a form of a closed list of features. We are dealing with a large variability and diversity. The result of diversity in an organisation is: a valuable diverse team contributing to, among others, formation of different experiences, various points of view fostering cooperation, creative problem solving, innovation and creativity. And managing diversity should be defined in the broadest sense, understanding it as systematic activities of the company, aiming at engaging diversity of human resources in company operations, and treating it as a source of strategic advantage. The concept of managing diversity today is an important and real issue. Considering the requirements and the needs of the labour market, customers or employees and the pursuit to their continuous improvement is becoming more and more a norm and standard, which needs to be met in order to effectively compete and build competitive advantages in the current economic conditions. In general, the concept of managing diversity is based on a simple structure that recognizing numerous human profiles in the organization contributes to the economic success, if it is deliberately included in the strategy and practices of managing the organisation. The way of understanding and managing diversity and selecting the right model of implementation of this concept is connected with the nature of business pursued and the size of the organisation. However, regardless of these conditions, it is worth to take into account the factors that affect and create managing diversity in the organisation. These include: • managing diversity should not involve separate actions in the company, but be a tool to obtain competitive advantage directly connected with the strategy of the company, • system/strategy of diversity should be compliant with the strategy of the company, organisational structure and specificity (uncertainty) of the external environment, • to create a diversity-friendly climate the engagement of management is necessary, and the diversity in the organisation should be identified and managed, • organisational culture plays an important role, its assumptions must reflect the fundamental values, generally applicable and observed in practice, • people and the work they perform and involvement manifested should be seen as precious values for the organisation – then it will be much easier to understand the ideas and goals of managing diversity. Building reputation of the company as a goal of managing diversity in the organisation Over the last 30 years, there have been significant changes which have resulted in an increased focus of companies on investing in development and managing intangible assets. As T. Oleksyn [2014] notices, the value of intellectual capital, opinion about the products, reputation or customer satisfaction, constitute important values to the owners. Evidence from studies suggests that human capital is considered by investors as one of the most important form of intangible assets [Bassi, Lev, McMurer, Siesfeld, 2000]. The changes in human values and attitudes were also important for the functioning of the organization. And these significant changes in social values are reflected in the following issues: • increased interest in the general behaviour of the company – increasing number of citizens are interested in understanding the ways in which goods and services sold by the companies are made. One of the effects was a greater emphasis on higher transparency and reporting of corporate activities in respect of ecological, social and economic activities; • increased support for respecting human rights and equal opportunities in the workplace – this led to the creation of new law preventing discrimination and increasing awareness; • greater role of ethical investments – both in Europe and in the United States, the interest of institutional and retailer investors in having capital involved in “ethical investments” has grown. These are companies which meet the norms of economic, socialand environmental conduct specified earlier. The phenomena presented above help in creating an environment that fosters implementation of programmes in favour of diversity. It has been known that reputation is a very profitable long-term investment. Research confirms that by building their image, many organisations take actions in favour of diversity in the organisation [Bukowska, 2013; Kopeć, 2013; Kraczla, Wziątek-Staśko, 2014; Matuska, Sałek-Imińska, 2014]. In the study analysing the reasons for which the organisations undertake actions for employees, conducted by M. Gableta and A. Bodak [2011], it was noted that the companies take into account the interests of their employees, as this mainly promotes building good reputation (42%). Therefore, satisfied employees, working in a friendly atmosphere, without discrimination, in the sense respect, constitute the best tool for building reputation and image of the company among future employees, customers and business partners. Some companies applying diversity define themselves as “valueoriented” organisations. These companies believe that their internal culture is a unique source of competitive advantage and that as such it distinguishes them from their competition. Such companies believe that a strong and significant set of values prevailing in the organisation will encourage their employees to being creative, will attract talented new employees, will help managers in dealing with changes, will provide responsible behaviour towards external partners and will support the focus on long term goals of the company. Managing diversity is often used by organisations simply as an element of a PR strategy and marketing actions. On the one hand, these may be actions aiming at gaining more favour and interest from customers, and on the other hand – actions, the aim of which is gaining sympathy and interest of other entities (e.g. media, local authorities). The issues related to corporate reputation are generally limited to larger companies. But it is a factor that drives the long-term values of a company. However, it would be misleading to suggest that small and medium-sized enterprises are not interested in reputation. The approach of these companies to this issue is a bit different than that of larger organisations. In many cases, the subject of their interests is more local and associated with local or regional authorities or residents (current and potential employees and customers). Family businessmen are aware that their professional behaviour is a part of the family image, not only in the material sphere, but mostly social and cultural one, unlike in the case of nonfamily businesses, which is confirmed by numerous studies [Sobiecki, Żelazko, 2015; Mazur-Wierzbicka, 2014; Rybak, 2014; Banasiak, 2014]. Many studies have shown that organisations which recognize the potential of diversity of human resources and the potential created by the diversity of its employees, function better than those that do not take it into account, and mainly through their activity, significantly shape their image and reputation, which is presented in Table 2. A low level of openness of the organization to diversity generates attitudes and behaviours of employees, which are not only unfavourable to the efficiency of functioning of the organisation, but also seriously reduce the chances to create a good image among internal (employees) and external (e.g. customers) stakeholders. It is hard to imagine that hiding or covering manifestations of intolerance or lack of respect would arouse the desire to cooperate or that discrediting employees of another race or origin to their business partners would encourage them to cooperate. Here, it is worth pointing out that a significant factor fostering the formation and reinforcing of the positive image and reputation of the organisation is the stability of employment, which applies to both small as well as large entities and every industry. In the companies with a high rotation rate, it is difficult to build longer lasting interpersonal relations, which are the grounds for the creation of diversified effective teams. Basically, managing diversity in the organisation affects many social and economic issues of the organisation. Namely: • compliance with the law; • avoiding the risk of losing and/or weakening of reputation and image; • demonstration of commitment as a socially responsible company (diversity is one of the aspects of the corporate social responsibility); • optimization of human resources management (better management of available competencies, preventing employee shortages, improvement of the social climate, etc.); • increasing economic efficiency of the company (developing innovative capabilities, improving the image, better understanding of the customer expectations, opening to new markets, etc.). In the light of the above, it can be said that the reputation of companies is a question from the borderline of ethics and business, and it is connected with a broader issue of the so-called corporate social responsibility (CSR). In accordance with the recommendations of the European Commission, a company strategy should include activities aiming at protecting and improving the welfare of the society and the organisation [Renewed EU strategy, 2011]. Affecting the employees is only seemingly easier than affecting the external environment. The fact to be taken into consideration is that the basic PR method, i.e. informing the employees, engaging in a constructive dialogue with them, is applied to a very internally diversified group, often incomparably more diversified then external environment. Meanwhile, the degree of information has a very large effect on the job satisfaction [Wojcik, 2009]. The objectives of PR in relation to the employees may consist of [Wójcik, 2009]: • creating attitudes of satisfaction and pride of the job, employer, organisation culture; • promoting teamwork, positive mindset of the employees towards their own tasks, profession, company or industry, co-workers, superiors of different levels, new superiors; • mobilising to fulfil specific, currently important tasks; • supporting participation in the desired projects, e.g. innovation, work rationalisation; • gaining support for the changes carried out or planned in the company; • exercising the rights of employees to criticise and be informed; • growing professionalism by familiarising the employees with new standards of conduct, regulations, changes in the expectations of the external environment (authorities, customers, suppliers, banks, public opinion) towards the subject and manner of conduct of the company, etc.; • making people more sensitive to the needs and expectations of the environment of the organisation; • combating negative opinions and negative attitudes to specific projects and novelties in the company. Moreover, it should be noted that the PR activities and those undertaken for the benefit of diversified human resources in the organisation cannot be limited to the already employed in the organization. They should also include potential employees in whom the organisation may be interested in the future (meaning pupils and students). Building relationships with vocational schools or universities may be considered a classic PR activity towards future human resources. As is apparent from the quantitative research concerning consciousness, needs and activities of companies in terms of managing diversity, commissioned by PKPP Lewiatan as part of the Diversity Index project, also organisations in Poland see the significant role of the actions taken for diversity in the organisation in building its image. Out of 900 economic entities surveyed in 2011, 66% indicated that managing diversity in the organisation may contribute to creating a positive image and reputation of the company [Raport, 2011]. The results of the national survey conducted in 2016 by Forum Odpowiedzialnego Biznesu (Forum of Responsible Business), in which the companies were asked about the effect of introducing managing diversity show that in large companies the improvement in the atmosphere within the company was noticed (45%) as well as the growth in the competitive advantage (24%). The companies admitted that the positive change was mainly connected with increasing diversity of the customers (55%), employee loyalty (49%), image improvement (39%), and attracting and retaining talented people (35%), where the last factor was notably more visible in the large and mediumsized companies rather than in the smaller enterprises [FOB, 2016]. Also on the international arena, the organisations treat the engagement in the issue of diversity as a business tool for building reputation, public relations, or a tool that helps to win tenders and contracts (especially from larger companies and the companies from the public sector). According to the study conducted in 2007 for the needs of the European Commission [Keil, Amershi, Holmes, Jablonski, Luthi, Matoba, Plett, Unruch, 2007], large companies and public organisations in the course of tenders or tender contests require more and more often from the SMES to provide information about the company’s policy in relation to equality and diversity. It has been shown that the development of such policy helps SMES in winning contracts. The Training Manual prepared by international experts suggests to implement the following actions through the development of a formal diversity policy [Keil, Amershi, Holmes, Jablonski, Luthi, Matoba, Plett, Unruch, 2007]: • prepare a one-page review with staff on what diversity targets will help them over the next year (e.g. flexible working hours around religious holidays); • set out a training plan and record the course of any training related to diversity; • specify the measures that have been put in place to select and recruit new staff; • include diversity statements (slogans) in brochures, handbooks and company guidelines (as might be done with health and safety issues); • obtain information on one’s staff and customers. This issue should be treated as a baseline for the strategy, coupled with an annual review of the progress of staff towards increased diversity. For a lot of EU member states personal data collection is a very sensitive subject – indeed in many countries no such data is kept by employers. Summary Building the image and reputation, due to the significance of these two elements in the competitive potential of a company, is a really important area in terms of strategic management. As is apparent from the considerations presented above, actions consisting of the creation and use of diversity of human resources in the company may support this process. What is special about family businesses is the engagement of persons representing various generations of the family within one organisation, thus people different from each other in terms of age, professional experience, but also approach to managing the company. A quite common view is that thanks to this diversity, family businesses combine tradition with modernity. A skilful use of this feature of a family business may contribute to the creation of a positive image and good reputation among customers, counter parties, and potential employees. Family businesses are mostly associated with safety and high quality, i.e. features that are highly valued by stakeholders representing various groups. These values are the basis for shaping the image and reputation of the company in the minds of various target groups. While building the image and reputation in the external environment, first, the image and reputation among the current employees must be formed, and the employees should identify with the standards and principles of conduct of the organisation, and most of all, its values forming a specific organizational culture. Given the above, it may be stated that an important role in the creation of ideas and opinions about a company is played by the ability to use diversity of a family business related to the multi-generational nature of the team. Diversity of employees in this respect provides the organisation with image-building benefits.

Authors and Affiliations

Dr Elwira Gross- Gołacka

Keywords

EP ID EP346596
DOI 10.5604/01.3001.0012.0991
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