Leadership

The New Shift For 2021 Family Business Leadership

Andrew Marsh is Vistage Chair for Northumberland and North East England. Having led a number of multi-million pound businesses during his career, Andrew is now a renowned specialist in developing business and business leaders, with an impressive track record for repeatedly creating sustainable growth.

Here, Andrew explores the new leadership shift for 2021, especially for those heading up family businesses: “2020 provided plenty of opportunity for leadership growth and evolution. Vistage Chairs across the UK have witnessed subtle shifts in the skills today’s leaders are developing as they learn to lead their teams remotely. This is not going to change any time soon in 2021, and certain skills will need to be addressed as we move into a new stage of the pandemic.”

“A huge 2021 future consideration for family firms will be the potential changes to the tax system. Inheritance tax, capital gains, dividend tax and the repayment of the costs of Covid to not just their business, but the whole country, will all be on the cards. Tax planning and considerations will never have been so important.”

“The loan repayments will change the face of financial health in all businesses, so leaders will need to factor that into their health checks. In the North East alone over 46,000 business have benefited from over £1.7bn of funding under the two biggest Coronavirus loan schemes.”

“Those figures account for only 3% of the balance across the country. The Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme have provided essential financial support to businesses across the UK that are losing revenue and seeing cash flow disrupted as a result of the pandemic. Fantastic support, which is great that people have taken but now the opportunity is how leaders look at and restructure their business model to get into great shape for the economic landscape. A pivot could be on the cards and of course, there are now opportunities and scope for expansion with the virtual landscape. These opportunities are the key to reshaping a company’s financial position and cash flow.”

“This week has also seen positive news that insurance companies now have to pay out to SME’s for Covid lockdown losses. Ten of thousands of businesses will receive pay outs dating back to the first lockdown, following a court ruling. I’d therefore urge all business leaders to contact their insurance company to see if you are due a pay out!”

“On top of that, culture in the workplace (or in the remote workplace) is having to change massively. Without doubt, there are three main focuses that leaders now need to develop to be successful – emotional intelligence, demonstrating empathy and creating an environment that looks after the wellbeing stakes for all staff.”

“In a family business, there are always lots of things to do and the danger is the family owners take on more than they should filling any skills gaps. It’s really important though that you look after yourself as it is no good to anyone if you burn out. In the good old days, we were always told to put on our own oxygen mask before they focus on helping others. This puts you in a stronger position to help whilst you concentrate on sharpening your own sword for survival. At this point a number of factors come into play.”

“Within all family businesses there is a passion. A personal connection and relationship with the business whether inherited, passed down through the family or built from the ground up. Under stress, this relationship can feel like a burden. The love leaves and the weight of the business and its team can become an obligation.”

“A person at the top behaves differently if they are the MD of say a corporation or private firm. They are more detached, can move on more easily and have no issues in delegation. Family business leaders need to ensure they have a healthy relationship with their company, and whilst the legacy and why they do what they do is important, at Vistage we help them remember who they are without that stress.”

“Another issue that family run businesses face is people. People make the company, but they also break a company. However, in a family business generally every member of staff becomes a member of the family. Leaders go above and beyond to make sure staff are looked after, often even if it is not deserved. Family firms are loyal, committed to their staff. So, when tough decisions come, such as redundancy or furlough, it hits the leaders hard on a personal level too. There are coping techniques for this, something we are having to share more and more.”

“Many family businesses are now doing a very sensible move and reaching out to bring in non-family members to help build sustainability on a high level. Boards and Non-Executive Directors are becoming more and more common, and whilst this means some of the ‘power’ is lost, it also relieves the owners of whole responsibility, allowing them to perform better. This is a great move for those who want their company to be more than an income, and for it to actually be a going concern.”

“This move allows new fresh insights and perspectives and can be particularly useful in cases of family conflict caused by decisions needed to be made for the business. It can also help when there is a different direction needed, and when strategic decisions are different to previous generations, especially when the older generations still hold the shares!”

“Other challenges faced by family business can be structure. Other than boards and NEDs, these pressures can be either eased or exacerbated by expanding into new partnerships or into employee owner share schemes. This can have major wellbeing positives but equally, if not handled right, can cause discord and regret.”

“Talent will always be an issue in family run firms. Leaders in family firms have a tendency to just get on and do it themselves if they are short of staff, but this leads to burn out, creates stress and can also dilute trust in a workforce who may begin to feel undervalued. These leaders need to work on trust and delegation and find a better way to recruit their team. There is no positive in being a hero leader. We should all be aiming to be a leader that creates heroes in our team.”

“Remote and agile working will be bringing huge pressures for family firms of the legacy ilk. The people within these firms are used to being close to each other and the team on a daily basis, supporting each other and having lots of fun as well as working hard. The shift to having to now conduct meetings on zoom, have discussions over email and working remotely on their own will be a little bit like losing the soul of the business. They will have to work hard to keep the core personable elements, so it isn’t just all business.”

“It is crystal clear that leaders in this position have a huge opportunity to rebalance their companies, to look after the work force and to plan for the future which looks very different. This can be lonely, it can be out of comfort zones and can creates a huge amount of pressure and stress, but remember you are not alone.”

Vistage and all the UK regional chairs are working tirelessly to support business leaders going through these scenarios on a daily basis. One to one meetings, peer groups meetings and our guidance/advice videos or articles are making a huge difference. In fact, many members have given feedback is that currently it’s the best investment they make in themselves.”

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