From start-ups to global multi-nationals, family businesses are powering national economies and employment opportunities.
Many listed companies across Asia’s stock exchanges are driven by families.
Asian family businesses are rapidly growing across Asia Pacific and will become global powerhouses.
“One thing I’ve learned is that you have to drive change fearlessly, if you’re going to continue to grow. Not doing this is the single biggest barrier to success – you cannot meet the needs of an evolving market if you’re not prepared to evolve yourself.”
Second generation family business leader, Singapore
Demands of the new economy call for family businesses to stretch their potential further to optimise existing markets and tap on new ones whilst exploring the innovation imperative. First and second generation of family owners in Asia now face a vastly different business landscape to when they first started but they are also taking centre stage in the global economy, at the heart of a region that has tremendous room for development and growth. However, sustainable growth and winning strategies in family businesses not only consider the opportunities and risks in the business sphere but also embeds the unique needs and competitiveness of their families too – including succession and long-term stewardship.
“We are formalising parts of the business to prepare potential family or non-family members as they take over in the future.”
First generation family business leader, Singapore
As Asian family businesses continue to establish greater presence globally and grow to a certain size, they also face more intense competitive pressures, rising costs and the impact of global megatrends. Yet for any family business to take advantage of the opportunity to grow in today’s globalised world, the challenge is to identify ways in which to do that as effectively as they can. That will require families to become more professional in their business and personal approach, which many family businesses in high growth economies are increasingly keen to do. It may be about formalising roles in the business and putting more structure to the way decisions are being made. Either way, families will need to look into establishing greater formality in both the business as well as the family as their business expands.
“I have to attract the talent we need for the future. I’m very much aware that family businesses aren’t always as aggressive as they need to be in attracting talent from outside. But we wouldn’t be a half-billion-dollar company without constantly grooming our next generation of leaders.”
Third generation family business leader, Singapore
Attracting and retaining talent continues to weigh on the minds of family owners as they compete for the right skills and a strong talent pool needed to drive their business. The next generation of leaders, be it family or non-family members, adopt a very different outlook and expectations of their careers today. How should the family business operate in a way that enables the next generation workforce to meaningfully demonstrate their strengths and for them to see a clear career path that will provide the opportunities to grow with the business? For non-family members, navigating the dynamics of family can be tough and sometimes poses a barrier for them to maximise their capabilities. As a family business professionalises, steps can be taken to ensure such occurrences are minimised.
“One of the biggest challenges that I faced was earning the respect of other people. A lot of people might think ‘You’re only here because your dad’s the boss’, and while that might be true in terms of getting the job in the first place, once you’re in the role you have to work three times harder than anybody else because the spotlight is always on you.”
Second generation family business leader, Australia
Only 34% of family businesses in Asia have their successor chosen, with 11% having a robust and documented succession plan. The urgency for a clear handover path as transition takes place is greater than in other parts of the world. As Asian family businesses are generally facing only their first or second transition, the process may be new to them. And for those taking over the family business, expectations and plans of the succession process can pose some worry – how will their parents adapt, how they will measure up and overall being able to manage the process successfully by ensuring their parents still feel involved and able to contribute.
“When you have a business that involves family members, you are going to have conflicts sometimes within the family, but also with other colleagues. But disputes with colleagues are easier to resolve because your relationship is purely professional. But disputes between relations involve many different roles – father and son; mother and son; brothers and sisters; and on top of that you are also colleagues.”
Second generation family business leader, Hong Kong
Conflict can stem from many areas within the business but it is particularly acute in a family business when the business grows, and the number of stakeholders increase but not enough is being done to address everyone’s needs and expectations. Between generations, there can be gaps in communication and credibility. The difference in objectives (short-term versus long-term) between owner-managers and professionals also gives rise to conflict. The collision of expectations and the lack of communication can be emotionally-charged but more importantly, harm relationships between key family members which eventually affects the business.
In addition to professionalising the business, families are also looking at how the professionalise family members too. As one respondent in our last survey said: “the soft issues are the hard issues when it comes to family matters.”
In order to do that, families need to break down the barriers that are affecting them the most. This often requires families to get into a room and work things out, it may also require individual family members to develop their management skills in order to give their best.
Our workshops and skills programmes are facilitated by PwC and INTES experts from across the globe, each of whom have many years’ of experience in helping family businesses to deal with difficult areas such as managing conflict, developing shared values and creating good governance.
The workshops are customised and designed for individual families to identify and unlock barriers to growth and implement best practice. They are designed to address critical areas such as agreeing business strategies, legacy plans and even exit strategies. Workshop topics include:
Making the right connections with other likeminded businesses is a sure way in which to identify crucial collaborations, develop new ideas and learn about best practice.
To help family businesses owners, next generation members, key family leaders and their management teams across the region to do just that, we aim to:
• Facilitate one-to-one or small group connections between family businesses across the region. The closed door meetings will be held by a PwC partner and typically take place in the home country.
• Host local events for family members to debate and discuss the challenges they face. These events will take the form of roundtables, seminars and conferences around specific topics.
• Create alliances with leading business institutions.
The Centre’s Advisory Panel comprises of family business leaders from across the global PwC network.
Ng Siew QuanAsia Pacific Leader
Dr. Peter BartelsPartner
PwC New Zealand
Dr. Dominik von Au
PwC Hong Kong
Dr. Karsten Schween
INTES Family Business Consulting
Ng Siew QuanAsia Pacific Leader