An approach for lasting family business success
The unprecedented events of the past year have presented family businesses with enormous challenges. In our Canadian insights from the Global Family Business Survey 2021*, we reveal the outlook of Canadian family business leaders and how they compare to North American findings. Although many have shown significant resilience and are optimistic for growth through 2022, now is the time to embrace a new formula for lasting family business success. Today’s family businesses require an approach based on becoming fit for growth, powering digital transformation, developing sustainability goals and empowering the next generation of leaders.
The COVID-19 pandemic has been a test of resilience for Canadian organizations, and family businesses are meeting the challenge and have ambitious growth aims in 2022. Two-thirds of Canadian family businesses expect to see growth in 2021 (compared with 74% in North America), and 89% expect to see growth in 2022 (compared with 92% in North America). Family businesses are also taking a people-first approach, prioritizing the well-being of their employees. In Canada, 88% are enabling staff to work from home, and a robust 64% are providing staff emotional/mental health support (compared to 56% in North America and 45% globally).
Family businesses have proven adaptable, and as they plan for growth in the years ahead, they have a powerful opportunity to differentiate themselves from the competition and position their business to succeed in an uncertain future. So is your business fit for growth?
The pandemic has proved the importance of strong digital capabilities as digitally enabled businesses have been better able to adapt to employee and customer needs. Building on this, the top priorities for Canadian family businesses are increasing the use of new technologies and advancing their digital agendas, which differs from our North American counterparts, who are more focused on expansion and diversification efforts.
And while 77% of Canadians want to use technology to drive efficiencies and collaboration in the business, only 40% plan to develop a clear and documented road map for digital transformation. How do you break free of barriers to achieve digital transformation? By understanding the value of data, upskilling your workforce and recognizing that transformation must be a part of a cultural shift.
Most family business owners want to create an enduring asset for future generations. We’re a world leader in social responsibility efforts, as 91% of Canadian businesses are involved in some form of social responsibility (81% globally), including 56% who say they engage in philanthropy (42% globally). Legacy matters (it’s top of mind for 67% of Canadians), and sustainability is an opportunity for them to build a business that will stay the test of time. What’s more, 44% of Canadian family businesses (50% globally) believe they have a responsibility to fight climate change and its related consequences.
And 50% of Canadian family businesses say there’s an opportunity to lead the way in sustainable business practices. This may be led by younger generations, who are a powerful force behind sustainability and are more likely to embed sustainability in decision-making and have a comprehensive strategy.
There’s a big generational shift coming, with half of the first- generation Canadian family businesses expecting the next generation will be the majority shareholders in five years’ time. And Canadian family businesses are concerned about keeping their business in the family, with 78% seeing the business as the most important family asset.
Anticipating their generational shift, succession planning is key—but only 34% of Canadian family businesses have a robust, documented and communicated succession plan in place. Topics like succession can be emotional, making them difficult to navigate and, as a result, tempting to avoid. Many families want to keep the discussion of these sensitive issues among themselves, but they agree that they often need professional support and moderation to address them properly.
When talking about succession, it’s important to understand the importance of values and how they may differ among family members. Clear company values can help to bridge the generational gap and give the next generation that sense of purpose they crave—but documenting family values isn’t a widespread activity for family businesses at present, although it should be. While 73% of Canadian families (78% in North America) say they have a clear set of family values, only 44% (53% in North America) have documented their family values and the mission for their company.
By working with family members to identify and document family values, business purpose and desired family legacy, founders and business leaders can better make sure their business reflects what matters most to those who will need to lead the business forward. Family businesses with values in a written form are also better prepared for succession and are more communicative and transparent.
*About the Family Business Survey: The Family Business Survey is a global market survey of 2,801 owners and executives between October 5 and December 11, 2020, including 205 in North America and 65 in Canada.