Family Firms Building A Lasting Legacy
8th November 2018 Paul Andrews
Nearly three in five UK family businesses say their long term goal is to contribute to the community and leave a positive legacy according to latest PwC Survey.
Optimistic about their future growth, nearly three in five (58%) family businesses in the UK say their long term goal is to contribute to their local community and leave a positive legacy, according to PwC’s latest family business survey. The 9th bi-annual global survey interviewed 130 UK family business members from director level through to owner, with 83% saying they expect growth over the next five years, 18% expect growth to be quick and aggressive.
The survey reveals businesses are recognising the importance of embracing technology with more than half (53%) of respondents believing their business will step up their digital capabilities over the next two years. Additionally, the number of business who said they feel vulnerable to digital disruption has almost doubled to 42% from 23% two years ago. More than half, 54%, feel vulnerable to a cyber attack.
Hannah Harris, family business leader at PwC, said, “UK family businesses play an incredibly important role in both the economy and society. Our survey showed that three quarters are involved in philanthropic activities beyond giving money to good causes, using their expertise to help their local communities. Many run apprenticeship schemes training up the next generation of the UK workforce. Building a legacy for future generations, they are able to invest long term and for over half, their long term goals include to be environmentally sustainable."
“Until recently the focus for many family businesses has been to improve their processes, become more efficient and better meet their customers’ needs. Our survey suggests this is changing. Family businesses realise they need to adapt to new sources of disruption, from emerging technologies through to societal trends around well-being and the environment. Given that many successful family businesses are already agile and able to make decisions quickly, this may feel more of an adjustment than a wholesale change.”
When asked what challenges family businesses were facing over the next two years, being able to access the right skills was the number one concern with 61% of respondents mentioning this as a challenge. This is followed by the economy 57%, the need to innovate 55% and Brexit 52%. Recognising they may need additional sources of funding and expertise to respond to these challenges, 22% would consider private equity in the future.
In terms of future business goals, being able to attract and retain the best talent is the highest priority for UK family businesses at 92% before improving profitability at 74% and offering compelling rewards to employees at 64%. Hannah continued, “Top of the list of challenges for UK family businesses is people. Across many UK markets there is a war for talent. While family businesses may not always be able to match salaries or offer share incentive schemes, they can offer a more secure and rewarding working environment where employees feel they are part of an extended family."
“It is crucial that family businesses map the skills they need for their business to continue to deliver their purpose and build their lasting legacy. To recruit a new mix of skills they will need to cast their net widely to attract a more diverse workforce. Family businesses have a great people track record: a loyal workforce, great local reputation and good links into their communities. They need to think carefully how they can use it to their advantage.”
On leadership and continuity planning, 53% plan to pass leadership on to the next generation of their family. However, only 18% have a formal and communicated plan in place and less than a third (29%) have not involved the next gen in these plans. Almost half of family businesses (49%) say they will look to bring in professional expertise from outside of the family.
Hannah concluded, “The next generation is key to a family business’ lasting legacy and not involving them in plans to pass on the business risks disengagement. It’s crucial to have a written and documented plan for the continuity of the business to improve transparency and trust. The next generation need time to build a collective sense of purpose and be supported in developing their own framework for success."
“Our conversations with family businesses show that often they recognise the need to start the process, but those conversations can be difficult. Timing is crucial and so is communication to all stakeholders.”
Download the full report here