Family businesses, by their very nature, are resilient and, amid the crisis, have proven their metal. However, the rapidly changing state of the world has served as a wake up call for family business leaders looking towards the future.
A recent Family Business survey conducted by PWC Global , featuring 2800 family business leaders across 87 territories , revealed the current thinking and future outlook for 2021 and beyond.
The findings show that it is no longer enough to rely on values and legacy to propel the business forward. Tomorrow’s family business requires a new approach for lasting success – one based on accelerated digital transformation, prioritisation of sustainability goals and professional family governance.
In terms of statistics, 64% of family business leaders surveyed, expect to grow in 2021, whilst remaining surveyed leaders expect growth in 2022 and beyond. 37% of surveyed parties have a sustainability strategy in place, whereas, 39% say that their digital capabilities are strong.
So where does all this point towards? Family businesses demonstrated resilience amid COVID 19 and are prepared to lead the post pandemic recovery. Though Covid 19 ravaged many organisations , family businesses proved robust and adaptable amid the pandemic. Through a people first approach that prioritised the well being of their employees and communities, 80% enabled staff to work from home whilst the remaining balance repurposed production to meet pandemic related demand . Only one third of family businesses had to cut dividends, and only 20% needed access to extra capital .
The massive shift to digital services and work from home models as a result of COVID 19 has firmly spotlighted the importance of strong digital capabilities. Though going digital has been on the agenda for family businesses for years, progress has been slow. A survey conducted in 2018 with family businesses showed concerns about technology and its impact amongst 80 percent of those surveyed.
Only 39% of surveyed family business leaders say that their digital capabilities are strong and only 19% say their digital journey is complete, meaning , there of course is room for improvement in digitalising operations. A 2019 NextGen survey found that younger family members see technology as one of the three most important drivers of change, and 64% felt this was the area where they could add value.
An area of chief concern amongst thse surveyed family business leaders , in times of COVID, is conflict resolution arising from succession planning. Family businesses can greatly benefit from professional structures being put in place in order to aid conflict resolution.
Relationships are what make a family business strong- but when emotionally charged conflicts arise, they can also be a hindrance to success. Disagreements are to be expected. Only 58% say that all family members share similar views about the company’ s direction. So what can family business leaders do when tensions arise?
When sensitive topics like succession are on the table, a family business can benefit from approaching internal governance with the same professionalism that is applied to business strategy and operations. But for many family businesses, there is still progress to be made. Only 28% of surveyed family businesses have family protocols in place, and , only 23% have rules for family employment and even if 77% indicated that they have to deal with conflicts , just 13% have a conflict resolution established.
( *All Statistical information presented in this blog has been obtained from the PWC Global Survey of Family Businesses – 2021 )
At the Family Business Office we can offer you assistance in dealing with family business issues through incentives supporting advisory and mediation services. Contact us today on [email protected] or visit our website at https://www.familybusiness.org.mt/ for further information.