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Barriers To Family Business Productivity

25th October 2019 Paul Andrews

Latest research identifies the barriers to productivity in family firms.

The UK has experienced a decade of flat productivity and the most recent figures from the Office for National Statistics shows four consecutive quarters of productivity decline.  Productivity is very much on the agenda at the moment and with constant advances in innovation and the fact that family firms are proven to invest for the long term there are opportunities available to the family business sector.

While the UK has some of the most productive family owned and run firms, there are also others that are not as competitive as similar firms in other countries and the latest research conducted by Family Business United, sponsored by Mazars, has looked into the challenge in more detail.

The research found that 44% family business owners felt that they were more competitive than their non-family counterparts with virtually the same number having no idea if they were or not.  But with a 96% in agreement that being a family firm affords competitive advantage, it is easy to see why improvements to productivity can have a big impact on the sector. 

Despite a willingness to further innovate and improve productivity, there are clearly areas that are stopping initiatives taking place so what are the biggest barriers to family business productivity improvements?

The Main Barriers To Productivity

  1. Lack of Senior Management Time (46%)

  2. Other Priorities Taking Precedence (45%)

  3. Lack of Available Talent/Skills to Implement Change (40%)

  4. Staff Resistance to Change (38%)

  5. Lack of Internal Knowledge or Expertise To Drive Change (38%)

  6. Cost of Improvement and Time for ROI to Come Through (32%)

  7. Lack of Knowledge About What to do to Improve Productivity (30%)

  8. Difficulty Accessing Finance of Capital (27%)

  9. Lack of Desire to Change (15%)

  10. Unable to Access Relevant External Support or Advice (14%)

As Paul Andrews, Founder and Managing Director of FBU explains, “Successful family firms that have been around for generations are aware of the need to evolve, to adjust their strategic plans to meet the current needs of their customers and do so on a regular basis.They recognise the need to remain relevant and focus their endeavours on the long term, often citing their desire to act as stewards of the business, passing it on to the next generation in a stronger state than when they took it on.”

As Paul adds, “Having said that they are willing to change, there is also the need for balance between the culture of the business, the resources available and the return on any investments and whilst productivity may be important in the long run to improve performance and financial returns, businesses are having to make decisions against a backdrop of clear uncertainty.  Now is a difficult time for business and whilst there may be a desire to improve productivity, there is a need to survive in the short term and make the right decisions and take the necessary steps to minimise the commercial risks associated with the uncertainty so it is not surprising that there are significant barriers to productivity programmes.”

As Margaret Laidlaw, Head of Entrepreneurial Business at Mazars UK confirms, “Family business owners are busy people at the best of times, focusing on the business, new ideas, new business opportunities and managing the business on a day to day basis.  It is not surprising to see a lack of senior management time as the biggest issue facing these firms when it comes to productivity, nor the fact that other priorities take precedence either.” 

That said explains Margaret, “Family businesses that look to the long term and take time to focus ON the business rather than IN the business are often best placed to succeed, taking time out to look at the opportunities and plan to address the threats to their businesses, and productivity is one of those areas that should be looked at too.  We live in a world of constant change and innovation and family businesses need to make sure that they are making the most of all the opportunities that innovation and best practice can make to their organisations.”

Tony Danker, CEO of Be the Business, the movement seeking to drive up productivity and competitiveness in the UK adds, “We believe that there are opportunities for every kind of business in every sector, and every part of the country to improve.  It’s easy to get caught up in the urgent at the expense of the important, so it’s no surprise to see so many family firms citing a lack of time or other business priorities as barriers to improving performance.”

As Tony continues, “When we speak to family businesses across the UK, those making the biggest performance gains talk about ‘working on the business’ rather than ‘working in the business’ and whilst time may be a constraint, family business owners need to ask themselves if  their time is being spent on the things that can make the firm more competitive.”

As Paul concludes, “Family firms across the UK are operating in unprecedented times with the continuing economic and political uncertainties quite rightly clouding the business agenda.  Nevertheless, family firms do focus on the long term and with the fact that being a family firm offers commercial and competitive benefits, innovation and improvements to productivity will make a big difference.  Despite the constraints to change, it is good to see family firms keeping an eye to the future, recognising the need to change and to keep productivity on the agenda so that when the time is right and the necessary resources are available, they are well placed to maximise the opportunities too.”

These findings were generated as part of the 2019 Family Business United annual survey of the family business sectors and the challenges they face.  Find out more here

 

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