This year’s PwC Global CEO Survey1 focused in particular on how public expectations of business are changing, and how this is having an impact on corporate decision-making. Stakeholder perceptions are especially important, and at the same time, the definition of ‘stakeholder’ is changing and widening, and will vary according to the type and sector of the business. It’s perhaps to be expected that next gens are very much aware of this agenda, and their priority stakeholder groups closely match those identified by respondents to this year’s CEO Survey.
As we discuss in the private company cut of the PwC Annual Global CEO Survey2, family-run companies have a business model built on trust, personal relationships, and strong values, and as stakeholder expectations change this could become a significant competitive advantage. This is why we've added stakeholders to our critical success factors. And as the next gen take charge, many of them will set a higher priority on ‘giving something back’. As Malcolm Preston, our Global Leader in Sustainability & Climate Change says, “Next gens are generally more focussed than their parents in assessing the real impact of their business. They want to make money, but often in a responsible way. Typically they can play a key part in driving change in the business, and more broadly in respect of the family wealth. I see many next gens now wanting to focus their business on being responsible about how profit is made not just how it is spent for example on philanthropic projects. They want to optimise the impact of their business by reducing the negatives and improving the positives. This is a way for them to start to show leadership and initiative within the family boardroom, by building family values into the decision making process. It helps them to find the voice to eventually drive greater change within the business. Considering the total impact of a business is certainly a better way to measure business success - see pwc.com/totalimpact for more on this."
1. The 19th Annual Global CEO Survey, Redefining business success in a changing world, PwC, 2016
2. Private companies: Old-style strengths, new-style challenges, PwC, 2016
Arjan Stephens’ family firm in Canada was built on the ‘triple bottom line’ right from the start. The Nature’s Path organic foods company has always given equal priority to people, planet and profits, and remaining true to those values has been at the heart of its success. During the recession, consumers cut back on premium-priced foods, but Nature’s Path remained true to its values: “Because we’re a family business we could take a longer view. We basically said, look, we believe in organics no matter what. And because of that, consumers know that our brand is authentic – that we stand up for what we believe. That set us up for the next phase of growth, and we basically doubled in the last five to six years.” You can read Arjan’s full story here.
In the new business landscape, trust is more important than ever before, and ever harder to build. As the corporate scandals of the last few years have proved, reputations that have taken decades – or generations – to build can be destroyed in days, or even hours. Emma Antolín, part of the second generation of the Spanish auto components business, Grupo Antolín, is typical of many of the next gens we’ve spoken to: “Ethical behaviour should be integral to the way every company operates on a day-to-day basis. It has to be a proactive part of the decision-making process. The same applies to transparency. The way you achieve that is by setting an example from the very top of the company, so that every employee lives according to those standards.” You can read the full story here.
It’s something of a paradox, but as the world becomes more global, consumers increasingly want a real relationship with the products or brands they buy – an emotional connection, or confidence in its authenticity. Clearly, family and private businesses could have a real advantage here, and this is reflected in the CEO Survey results: 58% of public company CEOs are concerned about public trust in business, but this falls to less than half for family firms. Many of these companies understand this instinctively – it’s inherent to who they are. In Australia, for example, the Credit Repair Australia business established by Mitchell, Gavin and Kiersten Symes’ father is still animated by the same desire to help people that inspired him to set it up in the first place: as Mitchell says, “In Australia, for example, the Credit Repair Australia business established by Mitchell, Gavin and Kiersten Symes’ father is still driven by the same desire to help people that inspired him to set it up in the first place: as Mitchell says, “We’re dealing with people; we’re not dealing with numbers or data or anything else, we’re dealing with people. In our family, we’ve been brought up to believe that life is about giving value to others, and whatever value we can create for other people will give us value in return. And everyone else in the company is inspired by that same passion”.
It’s also interesting to compare the business priorities of the next gen with those of the PwC Global CEO Survey respondents in the above chart.