Colliding generational perspectives results in successful family businesses.
Communication between family members and balancing financial success with strong relationship-building is the key to success for family businesses.
This is both in the short-term and for transitioning to subsequent generations, says the latest 2018 Family Business Survey from KPMG Enterprise and Family Business Australia.
Family businesses must also harness the wisdom of the current business owners, as well as the entrepreneurial spirit of the next generation to succeed.
The ninth bi-annual Family Business Survey presents viewpoints from two generations, both the current business leader and the next generation (NXG) of the same family business.
This is the first time that such an approach has ever been taken in family business surveys anywhere in the world.
KPMG Enterprise Partner Dom Pelligana says the ingredients for a successful family business can be distilled into 5 key points:
- Communicate, communicate, communicate.
- Embrace the entrepreneurial spirit of the next generation (NXG) and harness the power of knowledge, experience and wisdom of the current business leader.
- Engage in healthy debate, not heated conflict.
- Empower the NXG to take over the family business with confidence.
- Don’t wait – start now.
Says KPMG Enterprise Partner, Bill Noye: “Our survey shows that optimal outcomes are achieved when a balance is achieved between the business’ financial objectives and the positive relationships the family establishes with each other and their communities, which the Survey calls socio-emotional wealth.”
“Even though one third of family businesses have not addressed succession planning, the more positive the socio-emotional wealth of the family, the more likely business owners are to pass the business onto a family member.
“But nearly 22 percent of future leaders also viewed poor family member communication as the number one source of conflict within the family.
“Strong governance is also important for growth and family businesses are more likely to have a structure in place to govern the business rather than that for the family.
“For example, almost half have a Board of Directors while just over one third have a Family Council. It’s important to address this discrepancy head-on.”
Family Business Australia CEO, Greg Griffith said that the report emphasised the need for thorough succession planning and training the next generation for leadership, especially as over two-thirds of future leaders felt unprepared to take over the business.
“Family businesses need a shared vision,” he said. “Current leaders and the next generation have different views of disruption and entrepreneurship. Unless they co-operate, this lack of synergy threatens business confidence and the future of the family business.
“What is healthy is that family businesses are embracing progressive thought, innovation and diversity: the next generation of family leaders are equally split between men and women.”
This story was first published in The Fence magazine.