One of the strongest themes to emerge from our Family Business Survey this year was the priority family firms are giving to professionalisating their operations. Part of this relates to governance and processes, but it’s also about the type of people family businesses need to recruit to deal with the challenges of digital technology, a more disruptive economic environment, and a far more globalised world.
Family firms are not alone in this, of course. Every business, whatever its size or ownership structure, is facing stiff competition in the recruitment market, and needs to retain key staff with critical skills. But this is an area where family businesses often have a distinct competitive advantage. They may have much to learn from multinationals when it comes to issues like financial planning or risk management - but, when it comes to people, the family business can teach its competitors a lesson or two of its own.
The key, in fact, is in the name. The most successful family businesses have a strong culture and sense of identity, which reflects the values of the family that founded it. As a result, employees often feel they’re part of an extended ‘family’, and not just a faceless workforce. And as our Family Business surveys reaffirm, year after year, these firms also tend to have a greater commitment to retaining their staff, even in bad times, as well as a more personal way of working based on trust and respect. Though some may see this as a rather old-fashioned approach, there’s no denying that it makes for a more supportive workplace, where employees feel they’re treated as individuals, and where the board often know them by name. The length of time many employees stay at family firms suggests that this ‘sense of belonging’ is something people really do value, and which is getting harder to find in other types of company.
It’s a mixed picture, though. As the 2014 Family Business Survey revealed, family firms continue to face challenges in recruitment and retention, especially at more senior levels, where the share options on offer from multinationals are hard to compete with. But my team is coming across more and more examples of ambitious family firms who are finding smart new ways to reward and incentivise senior staff, and attract the bright new talent they need. If that sort of thinking becomes more widespread across the sector, family firms could start to offer the best of both worlds: the old-fashioned virtues of a family culture, and the professional prospects of a corporate career.
Henrik leads the Middle Market business for PwC globally, focusing on owner-led, private, family controlled and entrepreneurial companies. He’s particularly focused on family and owner led businesses, advising them on how to address strategic issues relating to the owner's agenda.