Corporate Social Responsibility
Family-Run Businesses Bank On Responsibility

Family-run enterprises are the heart of the german economy
Family-run enterprises are the heart of the german economy | Photo (detail): © Colourbox

Small businesses, managed by the owner, are typical of Germany’s small and medium sized sector. There are more than three million of them at the heart of the German economy - and when it comes to corporate responsibility they are real pioneers.

There is a sweetish smell pervading the air, the factory yard is humming with activity. Tractors with their trailers full of sugar beets drive on to a weighing platform, a few minutes later the beets are being jiggled over a dirt strainer, they then go through a washing bay; after that they are shredded, boiled and finally steamed into a mushy pulp. This then goes through presses to extract the juice, which then flows through filters. A machine removes the water and then it is ready - sugar beet syrup. It is a gooey, blackish-brown syrup that the Germans like to spread on their bread or use as an ingredient when baking and cooking. For more than a 100 years the Grafschafter Krautfabrik factory in the small town of Meckenheim south of Bonn has been making this syrup and for almost 60 years it has been marketing its product, “Grafschafter Goldsaft”, in its distinctively yellow paper cup.

During the sugar beet harvest the factory machines are in operation round the clock and seven days a week. The employees and also some seasonal workers work in shifts both day and night. This is the company’s crucial production phase and the boss, Stefan Franceschini, gives his people not just the traditional one day off, but two. According to him, if you work full power for weeks on end, you have to have some time off to wind down every now and then. The majority of the factory staff of 90 have been working for the company for years or even decades, whole families work for Grafschafter and some of them even date back three generations. The boss pays performance bonuses, asks his workers if they have any problems and praises good work; he lends his workers transport vehicles and tools if they are moving house, organises summer and Christmas parties and hosts the Carnival wingding - one of the region’s traditional celebrations held at Mardi Gras time. “We are basically,” says Franceschini, “just one big happy family”.

Pioneers of corporate ethics

It is not just this special proximity to the employees, as is the case with Grafschafter, that makes a family business different, but these companies also place great emphasis on mutual trust and reliability in their relations with their customers and suppliers. Strongly rooted in their regional home, family businesses get involved in sponsoring and promoting schools, clubs and local community projects. Their affinity with their location is also reflected in the moderate way they deal with their consumption of raw materials and energy, as a study of the Bertelsmann Stifung and the Stiftung Familienunternehmen showed.

Staff, society, environment - people who run family businesses pride themselves in acting responsibly. It is a well known fact that the big business groups often devote a lot of time and energy to promoting Corporate Social Responsibility (CSR) in their companies, but when it comes to family businesses they seem to have been born with it. “They are the pioneers of corporate ethics,” says Tom Rüsen, director of the Witten Institute for Family Business. “They hold dear all the old values, they are conservative, but in a way that can only be good for business.”

This responsible approach pursued by family businesses is however in no way a reaction to any external expectations, for example, not wanting to lag behind when other companies compile their carbon footprint. No, it is based more on the individual conviction of the family business owners, says Rüsen, on their personal values. “The way they perceive their social responsibility is based on their own personal motivation and their creative drive,” as was concluded by a survey conducted by two foundations - the Bertelsmann Stiftung and the Stiftung Familienunternehmen.

An eye for the big picture

Their business is after all inherently a long-term undertaking. Taking responsibility for one’s own success requires family business owners to be moderate and careful. This might well prevent them from making fast profits and enjoying expansive growth, but, on the other hand, it ensures reliability. Thomas Straubhaar, Head of the Hamburg Institute of International Economics, makes it clear that, when such things as responsibility and liability, the issuing and exercising of directives, control and correction are in just a few hands, the eye for the big picture becomes much clearer. Only those people who build their growth on substance and accumulate real corporate value are able to keep their company going for the generations to come. It goes without saying that family-run businesses absolutely refrain from doing business at the expense of the company’s future owners – the fundamental principle of sustainability. They think in terms of generations and not in quarterly figures.

“We serve our enterprises as entrepreneurs,” is the philosophy of Franceschini, the boss of Grafschafter. “With us it is a case of tradition, my father and my grandfather paved the way before me. Franceschini, 44-years-old, ginger hair, Rhineland accent, is the fourth generation manager at the syrup factory. His father who originally came from South Tyrol married into the family, in 2004 his son took over the company . Prior to this he had worked for a business group, his last position there had been as a manager in Italy. When his father asked him if he was interested in taking over the business, he did not hesitate. “The urge to keep the family business going was strong,” says Franceschini. “ I have always had a strong emotional bond with the company.”

This also applies to the company’s suppliers. The syrup factory contracts a good 140 farmers, many of them have been under contract for decades; Franceschini grew up with the young sugar beet farmers. He says that he also buys the fruit for his range of jams mainly from the surrounding areas. Sourcing one’s raw materials from the region is a matter of trust, at the same time the short transport routes make it cheaper for the company and better for the environment.

Doing business responsibly – an investment in the future

The entrepreneur has also adopted a green approach to the questions of water and energy. The steam that accumulates during production is channelled into cooling towers, the water that forms there is then used later to clean the beets and the machines. The company has its own waste water treatment plant that filters the soil from the washing water, local farmers and nurseries then come by and pick it up, thus turning the wheel full circle. The exhaust heat from the factory is then turned into electricity by a generator, additional energy is produced by solar panels on the roof. The photovoltaic plant has only been in operation for a few years, but it was his grandfather who started turning exhaust heat into energy more than 30 years ago.

“Taking care of both one’s staff and the environment means acting with foresight,” says Franceschini. It is after all in the company’s own interest to adopt a social and ecological approach to the way it does its business – it motivates the employees, consolidates the company image as a job provider, ensures good raw materials and reduces operating costs. At Grafschafter doing business responsibly has nothing to do with starry-eyed idealism. On the contrary, it represents a decisive investment in the future – for family-run businesses ethics and success are inseparably intertwined.