Family businesses are being urged to define, strategise and raise public awareness of their guiding principles to give themselves the edge over competitors, especially in an uncertain world.
Businesses that embody their values in everyday practices and routines get better results, declares the new PwC Global Family Business Survey 2018 launched in London this week (pictured below). Of almost 3,000 international multi-sector and multi-wealth level family businesses surveyed, 79% said they felt they had a clear sense of value and purpose as a company. That conviction was most strongly held by African and Latin American families (both 86% of respondents), closely followed by North American (81%) and European (80%) families, with Asian families less confident at 68%.
However, less than half (49%) of respondents had their values written down. The figure rose to 53% among families enjoying double-digit growth.
“The message is clear: adopting an active stance towards values really pays off,” the PwC survey said.
“Of the businesses with 10% or more annual growth in our survey, 84% had a clear sense of agreed values and purpose, compared with 76% among those with a lower growth rate.
“These findings tell us that as decision making grows more complex during an accelerated pace of change, family businesses need more than ever to implement guidelines and tools to codify their values as a way to make better decisions.”
The $17 billion German consumer goods maker Henkel AG & Company, led by the fifth-generation Henkel family since 1876, developed five principles and inscribed them on five pillars in the lobby of its headquarters in Dusseldorf.
• We put our customers and consumers at the centre of what we do
• We value, challenge and reward our people
• We drive excellent, sustainable financial performance
• We are committed to leadership in sustainability
• We shape our future with a strong entrepreneurial spirit based on our family business tradition
“The previous set of values wasn’t clear enough, and we had too many of them,” Dr Simone Bagel-Trah, supervisory board chairwoman at Henkel, told PwC.
“Reducing their number from 10 to five allowed us to ensure that everyone remembers and understands them.”
Peter Englisch (pictured), global and EMEA family business leader at PwC Germany, offered five principles for families in business to get value from their values in the survey.
1. “Be specific about your values: codify them, write them down and act on them. Do this with the full involvement of family members. This will strengthen not only your family cohesion but help you make better decisions for the family business
2. “Communicate your values internally and externally to activate your family business advantage Many family businesses have values but don’t always bring them to others’ attention. You can’t get value from your values if you don’t communicate them
3. “Develop business principles and a code of conduct that brings your values to life. This helps build trust and credibility internally and externally and open doors for new business partners
4. “Put values at the forefront of your recruitment efforts and embed them into your workplace, as you seek to bring the best talent to your business. Displaying your values is a good way to attract and retain the best talent for your business
5. “Focus on value creation along the entire value chain, such as ensuring that you work according to shared ethical standards. Your values have a mutually reinforcing impact beyond your own business”
Other highlights from the PwC survey include:
• Four out of five expect growth over the next five years and nearly a fifth say growth will be “quick and aggressive”
• Nearly three in five say their long term goal is to contribute to the community and leave a positive legacy
• Respondents identify accessing skills, the economy and the need to innovate as key challenges
• More than half of family businesses feel vulnerable to a cyber attack
• A third think they will be selling goods or services in new countries in two years’ time
• 53% plan to pass leadership on to the next generation