In modern business, transparency is often considered one of the key requirements for building trust and ensuring sustainability. Investors, employees, and customers alike encourage companies to be more open, whether in terms of financial reports, governance, or strategic direction. However, for family businesses, implementing transparency is not that easy. They face a unique dilemma: how to remain open without sacrificing family privacy, and how to balance family interests with the needs of the company?
Transparency: Business Values vs. Family Values
For public companies, especially state-owned enterprises (BUMN/BUMD), transparency is mandatory. Financial reports must be published regularly, management decisions must be accountable, and every shareholder is entitled to information. However, in family businesses, companies are often seen as an extension of the household. Sensitive information such as profits, dividend distributions, or investment strategies are sometimes only shared among a limited circle, even among family members.
The dilemma arises from the business perspective and the family perspective. From a business perspective, transparency is important to build stakeholder trust, prevent conflict, and create sound governance. However, from a family perspective, being too open risks triggering jealousy, exacerbating internal feuds, or embarrassing the family in the eyes of outsiders.
Why is Transparency in Family Businesses not Easy?
The main reason is that there are often no clear boundaries between ownership and family. Family members who are also owners are often confused about distinguishing which information is public as “owners” and which is private as “family.”
Even within one family, information access inequality still occurs. The founding generation usually has full control over information. When the next generation joins the business, unequal access to information can lead to suspicion and a sense of unfairness among them. This is especially true if the owner favors certain children.
Family business leaders often hide information—such as the salaries or dividends of certain family members—for fear that it will cause arguments. In fact, this attitude only delays the outbreak of problems. Mutual distrust flourishes.
Cultural factors also play a role. In many cultures, there is a value placed on keeping “family shame” or “kitchen secrets.” Disclosing financial reports is considered taboo, especially if the results do not meet expectations.
The Consequences of Removing Transparency in Family Businesses
In the short term, ignoring transparency may not have a significant impact on family businesses. However, this is not the case in the long term. Hiding important information from family members can lead to disappointment and prejudice. Minor conflicts can escalate and cause damage.
Not only family members, but non-family employees are also affected. Professional employees can lose motivation if they feel that important information is only for the “inner circle” of the family. In fact, they also need this important information in order to contribute optimally.
Transparency is part of good corporate governance. A lack of transparency opens up opportunities for the misuse of company assets for personal gain.
Currently, there are many family businesses that have sold some of their shares to the public, even though control remains in the hands of the family. In this case, investors naturally require transparency in financial reports. A lack of openness will make it difficult for businesses to obtain capital and grow.
Applying Transparency Wisely
So, how can family businesses deal with this dilemma? There is no one-size-fits-all answer, but these principles can help.
1. Do not mix family matters with business matters
This is a cliché idea. In fact, many people still do not care. The key is to set clear boundaries. Manage company information through formal channels such as financial reports, shareholder meetings, or family councils, not just informal chats at the dinner table.
2. Establish a solid governance structure
Form a Family Council and a Board of Directors with clear communication rules. This gives each member an official channel for obtaining information.
3. Transparency does not mean that everyone has to know everything
Distinguish between information that all members need to know (such as general financial performance) and technical operational information that is only relevant to family business management.
4. Improve family financial literacy
Often, transparency fails because the recipients of the information are not ready. Educating younger family members about finances will help them understand company reports correctly and prevent misunderstandings.
5. For families that are used to being secretive, start with small steps
Share simple annual reports first, then develop them into more open forums for discussion about business strategy.
In essence, transparency is not just an administrative obligation, but the foundation of trust. It is this trust that will unite family businesses across generations. Healthy openness can minimize conflict, increase employee loyalty, and attract investors.
The key is to find a balance. Being too closed is dangerous, but being too open without limits can also hurt privacy. The dilemma of transparency can only be overcome with wisdom, tailored to the family culture, business scale, and the generation currently in charge.
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