Family Business Survey 2023

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The notion of how to build trust in business is changing—fundamentally and rapidly. For everyone—including customers and employees—issues like environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) have become litmus tests for trustworthiness. Due to powerful demographic shifts, most of today’s customers and employees hail from generations—millennials and gen Z—whose values differ from those of baby boomers. Family businesses, which for years have relied on a trust premium, built up over generations, have been slow to get the message.

At a basic level, the formula for building trust is expanding. Businesses will need to take into account new groups of stakeholders who have different expectations around what builds trust, and who consume information in entirely different ways. When it comes to these new measures for earning trust, family businesses will need to do a much better job of both showing and telling: increasing the visibility of their efforts and communicating them consistently to stakeholders.

These are among the key findings of PwC’s Family Business Survey 2023. Trust has been—and remains—a vital competitive advantage that sets family businesses apart from other companies. The Edelman Trust Barometer confirms that family businesses are trusted more than other businesses: their trust score is 12 percentage points higher than that of businesses in general. Higher levels of trust can result in better performance, as demonstrated by recent PwC research showing a strong correlation between trust and profitability.

While market pressures and rising costs mean survival is the main priority for family businesses globally, our latest data shows that those family businesses which are focussed on digital transformation and diversity, are reaping the rewards. Now more than ever, building competence and achieving strong financial performance are linked to corporate responsibility. The message is clear, for family businesses to survive, they must transform. And that transformation is now.

Peter Englisch,PwC Global and EMEA Family Business Leader

This year’s survey of 2,043 family business owners in 82 territories uses a model developed by Sandra J. Sucher, a Harvard Business School professor of management and the author, with Shalene Gupta, of The Power of Trust, to assess whether family businesses are doing the right things in today’s world to build trust.

The model identifies four pillars of trust: competence (is the company good at what it does?), motive (whose interests is the company serving?), means (is the company using fair means to achieve its goals?) and impact (what is the tangible impact the company has, as opposed to the impact it claims to have?). The way the respondents answered questions based on these pillars reveal a disconnect between traditional views about trust and their impact on how family businesses operate today. They also highlight where and how family businesses will need to transform to ensure their legacy.

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2,043

Family businesses across 82 countries

77%

expect to grow in the coming two years; 14% expect to grow “quickly and aggressively”

20%

say reducing their company’s carbon footprint is a priority for the next two years

36%

say they focused on attracting and retaining talent despite that two thirds of family businesses say employee trust is essential

The new formula of trust

Greek survey revealed that the formula of trust has been transformed and appears that many family businesses are unfamiliar with it.

The new formula suggests that the way businesses define their purpose, prioritise actions related to ESG and DEI and stand on social issues are as important to stakeholders groups as the quality of products/services.

Greek Family businesses not only need to make transformative changes to build trust, they’ve also got to show and tell—by making their efforts visible and communicating them clearly to their stakeholders.

In today’s world, that means not just their customers, employees and family members, but also the public at large.

Transform to build trust: Customers

Greek Family businesses set their goals, prioritise their actions and direct their energy on traditional ingredients that build trust; quality of products, customers' satisfaction, introduction of new products.

However, today, these ingredients are table stakes. In a fast-changing world where half of its population are millennials and gen Z—people born after 1980—the priorities have changed. These generations want the businesses they support not only to deliver great goods and services but also to demonstrate their commitment to ESG issues and DEI—all along the supply chain. And they want companies to take a stand on the issues that matter most to them.

Greek Family businesses appear self-aware and honestly reported that they perceive that they are not trusted by their customers in the desired level. The root cause is that they do not prioritise what their customers value most.

Transform to build trust: Employees

Family businesses understand the importance of employee trust. Two-thirds say it is essential. But when looked at more closely, this conviction is not matched by action in the three factors that employees’ trust most depends on:

Purpose and values:

This is traditionally where family businesses have excelled (74% said they have a clear company purpose) but the message has not been widely disseminated to employees.

Accountability:

Creating a structure for accountability that allows employees to speak up about their concerns is a good way to help build trust. Of the family business owners surveyed, 42% said they allow employees to appeal or question management decisions. That means 58% do not. So here, too, there is significant room for improvement.

Diversity, equity and inclusion:

This is an area where family businesses counter perform. Of the family business owners surveyed:

Only 18% stated that they have a standard policy on DEI
Only 26% responded that they have a clear commitment that advances DEI
Only 24% noted that they have a person/ team responsible for DEI

Transform to build trust: Family members

Family business leaders understand the need to have trust between their family members, and 69% believe they have built that trust. But they also say that conflict within the family has a spillover effect on building trust across the wider business. More than one in five respondents say family disagreements are the biggest challenge when building trust with all stakeholders.

Dealing with conflict has never been easy for family businesses. It’s part of an ongoing struggle many have with establishing strong family governance structures.

In the 2021 edition of the Family Business Survey, only 5% of respondents said they had conflict resolution mechanisms to deal with family disputes. In this year’s survey, that share is only marginally higher, at 7%. And only a minority of family business leaders say they have formal governance structures in place. This includes shareholder agreements, family constitutions and protocols, and even wills.

The message from this year’s survey is clear: family businesses not only need to make transformative changes to build trust, they’ve also got to show and tell—by making their efforts visible and communicating them clearly to their stakeholders. In today’s world, that means not just their customers, employees and family members, but also the public at large.

About the Family Business Survey

PwC’s Global Family Business Survey 2023 is an international market survey of family businesses. The goal of the survey is to get an understanding of how family business leaders perceive their companies and the business environment. The survey was conducted online in collaboration with the Family Business Network International (FBN International). The survey conducted 2,043 interviews in 82 territories between 20 October 2022 and 22 January 2023. Respondents comprised businesses ranging from under US$10 million in revenues (24%) to multi-billion-dollar enterprises (6%). Close to half (47%) report annual revenues of more than US$51 million. Manufacturing accounts for 40% of the businesses surveyed, and 24% are in consumer goods, with the rest coming from financial services, technology and healthcare, among other industries.