Family businesses need a new trust-building formula

Trust has been—and remains—a vital competitive advantage that sets family businesses apart from other companies. But two key findings from PwC’s 2023 Global Family Business Survey, highlighted in the above charts, reveal that many family-owned companies are at risk of losing that trust if they don’t fundamentally transform. Although almost all respondents agree that the trust of their customers and employees is crucial to their business, only half or fewer say they’re actually trusted by them. 

Why? The second chart above offers a succinct answer: a solid majority of family business owners are not taking steps that have been proven to earn the trust of today’s stakeholders, who are no longer just customers but also employees and the public at large.

The expectations of those stakeholders increasingly take into account a company’s social and environmental impact. Nearly three-quarters of respondents in PwC’s 2023 Global Consumer Insights Pulse Survey said they would be willing to pay more for food produced in an ethical way. Half of respondents in the previous year’s survey said ESG considerations influenced their trust in a company and their decision to recommend it or its brands to others. Similarly, more than half of the employees participating in PwC’s 2022 Global Workforce Hopes and Fears Survey said it’s important that their employer is transparent about the company’s impact on the environment, and that it’s very important that their employer is transparent about its record on diversity, equity and inclusion (DEI). 

Responding to these changing expectations will require a retooling of traditional company values. They will need to be refashioned into well-articulated, observable actions centred around the things that matter most to broader stakeholder groups:

Establish two-way communication. Modelling the ideals that today’s external and internal stakeholders care about starts with a clear feedback mechanism for customers and a fair internal system for reporting misbehaviour inside the company. 

Boost transparency. Regular public reporting of ESG and DEI targets, and performance against those targets, is crucial to building trust among both customers and employees.

Speak out on social issues. Family businesses should be more vocal, visible and active. Public trust matters, and that means showing that you care about what’s going on in the world. 

Show and tell. It’s one thing to make transformative changes. It’s another to make them visible to outsiders and communicate them clearly to stakeholders. Annual reports and a company website aren’t enough. Public announcements on social media about progress on DEI, for example, including any awards and accolades, are a way that family businesses can demonstrate their values and safeguard the trust premium they’ve worked so hard to build.