LONDON, February 16, 2021 / PRNewswire / – In a year where companies have had to change the way they meet the needs of society and the environment, a new global survey of 2,801 family business owners is at risk of family businesses being left behind.
While more than half (55%) of the respondents saw the potential of their company as sustainable, only 37% have a defined strategy. European and American companies lag behind their Asian counterparts in their commitment to prioritizing sustainability in their strategy. 79% of respondents on the mainland China and 78% in Japan reported that sustainability is at the heart of everything we do, compared to 23% in the US and 39% in the UK. Larger companies and later-generation companies are also bucking the trend, with a greater focus on sustainability.
This reluctance to accept sustainability comes about despite the fact that family businesses are most likely to see a responsibility to society. Over 80% are committed to proactive social responsibility and 71% tried to keep as many employees as possible during the pandemic. It’s not a function of economic pessimism either – less than half (46%) expect sales to decline despite the pandemic, and survey respondents were optimistic about their company’s ability to withstand and continue to grow in 2021 and 2022.
Instead, it is an increasingly outdated notion of how companies should respond to society. 76% in the US and 60% in the UK place greater emphasis on their direct contribution, often through philanthropic initiatives rather than a strategic approach to ESG matters. Family businesses are also somewhat isolated from the investor pressures currently forcing public companies to put ESG at the center of their long-term plans for economic success.
Peter English, global family business leader at PwC, says:
“It is clear that family businesses around the world have a strong commitment to a broader social cause. However, customers, lenders, shareholders and even employees are under increasing pressure to make a significant impact on sustainability and broader ESG issues. Many publicly traded companies have done this. ” started to answer, but this survey shows that family businesses have a more traditional approach to social contribution.
“Family businesses have to adapt to changing expectations, creating a potential business risk. It’s not just about making a commitment to good, it’s about setting meaningful goals and producing reports that have a clear sense of their values and Values show purpose when it comes to helping economies and societies rebuild better. “
growth
The survey shows that family businesses weathered the pandemic relatively well. Less than half (46%) expect sales to decline despite the pandemic, and respondents were optimistic about their company’s ability to withstand and continue to grow in 2021 and 2022.
Family business behind the digital transformation
Although 80% of family businesses have adapted to the challenges of the COVID-19 pandemic by allowing employees to work from home, there are also concerns about their overall strength in digital transformation.
62% of the respondents described their digital skills as “not strong”, another 19% described them as being in progress.
However, there are significant generational differences here: 41% of companies that describe themselves as digitally strong are in the 3rd or 4th generation, and Next Gens has taken on a larger role in 46% of digitally strong companies.
Peter English says
“It is worrying that family businesses are lagging behind the curve. There is clear evidence that strong digital skills enable agility and success, and that they share a similar enthusiasm for sustainability
“Companies should consider how they can leverage Next Gens’ experience and new insights when it comes to prioritizing their digital journey.”
The governance gap
While family businesses show a high level of trust, transparency and communication, the survey shows the advantages of a professional governance structure. While 79% say they have a governance process or a governance policy in place, the numbers are falling dramatically in key areas: just over a quarter of states have a family constitution or protocol, while only 15% have conflict resolution mechanisms in place.
Peter English says
“Family harmony should never be taken for granted – it’s something that needs to be worked on and planned with, with the same focus and professionalism that applies to business strategy and operational decisions.
“Regulators around the world are increasingly concerned about family business succession, especially when a third of 1st, 2nd or 3rd generation companies expect the next generation to become majority shareholders in the next five years.
“It is therefore crucial that companies take a leadership role in ensuring formal processes in order to ensure long-term stability and continuity.”
Notes for editors
- The survey on the family business can be read here: https://www.pwc.com/familybusinesssurvey
- The report is based on 2,801 interviews with family business leaders and decision makers in 87 areas between October 5th and October 5th December 11, 2020
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