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How family businesses are responding globally and the foundational approaches that can lead to success
In this article and podcast episode, Karmen Yeung, National Head of KPMG Private Enterprise, KPMG China; Camilla Cullinane, Tax Partner, KPMG Private Enterprise, KPMG Ireland; and Robyn Langsford, Global Leader KPMG Private Enterprise Family Business, Partner in Charge, Family Business and Private Clients, KPMG Australia, explore trends and strategies that shape family businesses’ future, how family businesses are responding globally, and the foundational approaches that can lead to success.
Listen to the authors discussing trends and strategies on our podcast by clicking on the player below.
Family businesses have experienced significant turbulence and change over the last quarter century, which redefined the fundamentals of social interaction and triggered the restructuring of even some of the most steadfast industries and sectors. Technological advances coupled with societal and environmental forces have upended the status quo of how business is conducted and catalysed a growing number of mega-trends that will likely continue to influence all commerce globally.
The entrepreneurial ethos of family enterprises enables them to think laterally and perform with agility in circumstances that are beyond their direct control. They can, however, often do more to ensure successful outcomes and transitions in uncertain times.
Mega-trends Influencing Strategy
Labour scarcity
Whether triggered by the COVID-19 pandemic or merely exacerbated by its upheaval, labour shortages have impacted all businesses globally, in part by the so-called “Great Resignation of 2021.” But the world’s workers continue to re-evaluate their careers, leaving positions in record numbers. A recent survey showed that two-fifths of the global workforce are unhappy in their current job and considering quitting in the near future[1].
The challenging shift is not solely the product of short-term turbulence provoked by the pandemic — it’s also the continuation of a mega-trend that began more than a decade ago, induced by factors that include retirement, voluntary relocation, and the reconsideration of work-life balance. Many countries and territories are experiencing both the lowest unemployment rate and lowest labour force participation rates in half a century[2]. Consequently, labour markets have become increasingly competitive, and wages have risen to attract and retain talent.
Digitalisation and Cyber Threats
Digital transformation is a key trend family firms faced well before the global pandemic, but the COVID-19 crisis accelerated digitalisation’s proliferation and called attention to up-skilling and training shortcomings. Moreover, the impact of disruptive technologies holds the potential to shorten the lifespan of family businesses that can’t reorient their outmoded systems and practices.
Closely linked to the adoption of digitalisation, cybercrime is becoming one of the biggest operating risks for family firms, both in cost and reputation. Globally, an estimated 30,000 websites are breached daily, with 43% of cyber attacks targeting small businesses[3]. In the UK, approximately 82% of company boards or senior management consider cyber security a ‘very high’ or ‘fairly high’ priority, a 5% increase since 2021[4]. Cyber attacks not only represent the potential for significant financial loss but also have the power to erode the trust customers and partners maintain in any organisation.
Succession and Wealth Transfers
The largest intergenerational transfer of wealth in human history is already affecting most industries, and its impact is set to accelerate over the next decade. Tens of trillions are predicted to pass down from the baby boomer generation to their children and grandchildren[5]. For family businesses, the transfer of wealth and business leadership brings with it formidable variables, ranging from tax implications to succession complexities.
In some parts of the world where significant wealth growth has been experienced more recently, families are contending with financial and structural transitions for the first time. For example, in just 30 years, China has transformed itself from one of the world’s poorest nations to its second-largest economy[6]. With China’s modern-day prosperity also comes a relatively new demand for families in that country to preserve their wealth generationally.
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Creating a Culture of Resiliency
Tackling obstacles generated by today’s mega-trends often necessitates a mix of leadership strategies as different as family enterprises themselves. Successful families can often have a clear objective and profound sense of what is important when facing challenges or the unknown. They tend to leverage their ability to pick out the one or two factors that are key in every decision, allowing them to remain focused on being agile in any business climate.
Sometimes, hiring leadership outside of the family can provide a fresh perspective that can carry a business forward in times of uncertainty while family members are afforded the space to build their enterprise’s culture within both the family and the business.
Different generations can also play key roles in addressing uncertainty and creating a culture that recasts challenges as opportunities. The founding generation typically consolidates power, decision-making, and control. In many cases, critical decisions are simply made around the dinner table. But as the second and third generations take over, it becomes clearer that a more formal approach to decision-making is necessary to keep the family aligned.
Family businesses that take the time to work with family members across all generations, aligning values, vision, and unifying objectives, typically perform better when confronting obstacles because of their ability to pivot quickly while maintaining clarity about their goals.
Clear Communication Leads to Strong Governance
Communication is essential to build the strong governance frameworks and structures families need to overcome challenges and meet their goal of business longevity. Clear and transparent communication within the constructs of the business and the family also lead to socio-emotional wealth — a glue that knits families together beyond the profitability of the business and ultimately leads to resiliency.
Families that successfully develop robust governance frameworks usually share some common characteristics, including aligning their values that place the needs of the collective family above those of any one individual or a particular branch of the family. They have also ensured everyone has a stake in the business, which is especially important as it changes hands to the next generation. And when that transition occurs, they are very clear on where the talents lie in the family and the perfect fit for leadership.
Leveraging Diversity
Women are growing their representation in leadership roles, bringing a different dynamic with them. Traditionally, female members of a family business were expected to use their skills in capacities that fell outside the main scope of the business, such as philanthropic activities or organising family trade. But the skill set that has helped women shine in their objectives extraneous to the day-to-day operations of many family enterprises has also helped them excel in the C-suite.
With their often-inherent ability to multitask, while also possessing natural empathic qualities and strong listening skills, women leaders offer a very different management or leadership style than many of their male counterparts. Women leaders typically show the ability to make quick, critical decisions without losing sight of important details. But it’s also key for families to avoid stereotyping of any kind when considering roles for family members in the business. Diversity brings a different skill set and perspective that has the potential to complement the way every family enterprise conducts its business.
Regardless of gender, every leader advances their individual management style. But women leaders who are confident in their leadership approach greatly improve their chance of success, especially when coping with the unconscious gender biases that have traditionally been common in many families. The progress and the positive results generated by women will hopefully spur the concept of meritless succession in family firms, and bring to light the connection between equal opportunity and innovation.
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Transitioning to the Next Generation
Preparing the next generation for leadership success can take more time than many families consider. Starting the process as early as possible increases a family’s chances of securing the best results while also minimising the uncertainty that can make succession activities challenging. This is especially true if a family’s next-generation members show little interest in leading the family firm, forcing management to look outside the organisation.
But even if the next generation is willing and engaged in taking key roles in the family business, they still might not be “ready” to do so. Providing exposure to younger members of the next generation before handing them the reins of the family’s enterprise is a popular strategy and underscores the importance of beginning the succession process early.
Once next-generation members occupy the family business’s leadership roles, a willingness to diversify and adapt to the wider economic environment that impacts the business improves the goal of preserving the wealth the previous generations have built and passed down.
The next generation must also be brave in their actions and equipped to confront older generations that are often reluctant toward change and the evolution of the business. When new leadership plots a different course, the importance of the family dynamic, its aligned values, and the recognition by all stakeholders that decisions are being made to achieve long-term goals is paramount.
There is no one size fits all approach
There will never be a one-size-fits-all strategy that family businesses can deploy when navigating the choppy waters they will invariably all face. The freedom family firms enjoy in their operations may provide the benefit of agility when confronting some of today’s mega-trends, but without the guidance of strong governance frameworks, families may suffer from a lack of direction and unification when addressing obstacles, potentially elevating them into full-blown crises.
To mitigate this risk, families should define what “success” means to them and use that clarity to inform decision-making, regardless of the outward or inward pressures they’re experiencing. Once families focus on what is truly important, their business activities effectively become an instrument to help them reach their larger goals. Building a “business family” and not simply a family business is usually the key to achieving success and longevity.
References:
[1] https://www.weforum.org/agenda/2022/08/jobs-work-quit-great-resignation/
[2] https://www.investopedia.com/articles/personal-finance/062315/unemployment-rates-country.asp
[3] 30 Important Cybersecurity Statistics [2023]: Data, Trends And More” Zippia.com. Feb. 27, 2023, https://www.zippia.com/advice/cybersecurity-statistics/
[4] https://www.gov.uk/government/statistics/cyber-security-breaches-survey-2022/cyber-security-breaches-survey-2022
[5] https://financialpost.com/personal-finance/family-finance/giving-while-youre-living-and-other-options-for-the-huge-30-trillion-intergenerational-wealth-transfer
[6] https://hbr.org/2015/12/chinas-growth-a-brief-history
Podcast Transcript:
Ramia El Agamy: Welcome, everyone, to another episode of Women in Family Business. I am joined today by multiple guests and this is so exciting. Multiple guests joining us from different parts of the world. Very different parts of the world. We have here with us, Camilla Cullinane, who joins us from KPMG Ireland, we have Robyn Langsford, joining us from KPMG, Australia, and we have Karmen Yeung, joining us from KPMG China. Thank you very much, ladies, for being here with us today.
Karmen Yeung:
Thank you for having us.
Ramia:
This is quite something. Aside from the time difference that we’re spanning here with this conversation, we’re going to be having a very interesting conversation about family enterprises and the future of family enterprises in this very interesting and turbulent century. We’re going to be joining all your different cultural and geographical perspectives into this, but before we do, I think it’s very interesting to always know what makes people so passionate about this particular field. Why your passion for family enterprises, for your private clients? What’s kept you in this field? I know some of you have been doing this for a very long time. Let’s start maybe with Karmen. Tell us more about why you like working with multi-generational legacies.
Karmen:
A bit of my background first. I am a tax partner. I started my career as a tax consultant and grew up and based in Hong Kong, I chose to work in China. In particular, that was a fast-growing economy, which bring us a lot of opportunity and being able to advise them on some of the cross-border issue because we have very close business relationship between Hong Kong and the mainland, and being able to advise clients on the cross border issue is also value adding to me, and hopefully, it’s the same feeling of the clients as well. Over the time, I experienced and witnessed the fast-growing economy, and from that, we have a lot of high net-worth individual and family business growing up very rapidly.
Things that I witnessed very clearly as a difference between a listed company and family business is, listed company, you still have the corporate governance to guide them as to what they should do and who should involve and they have a better system of running the business. That’s contrast to a family business, which has a lot of freedoms because usually, it’s the Patriarch who will be managing everything and deciding on everything, but at times, they will retire and this is usually I will say, you cannot anticipate when they need to pass on the leadership and the business to the next generation and whether issue would arise during that point of time because they suddenly realize that the next generation doesn’t want to take up. There’s a whole lot of issue they need planning. They have a whole lot of issues just beside tax is one of the issue they need to take care of, the most important thing is talking about the leadership succession, and that made me a lot of interest to really try to help and understand the dilemma in the family, whether the founder has planned ahead and what to see the founder as the successor going forward to lead the business.
Ramia:
So incredible stories that you get to learn about and incredible people you get to meet. Robyn, what is it like for you? Similar motives?
Robyn:
Similar but I guess the three key factors for me are, I love working with family businesses first and foremost because it’s personal. Relationships are everything to me in my job and just having those really personal relationships rather than with a listed entity that has shareholders that you’ll never meet. You’re really at the heart of the personality of the business. The second thing I like is the long-term nature of it. Even just this morning, I was lucky enough to go and visit a client who I’ve worked with for, shall I say 30 years, and it was just so great. I’ve seen their kids grow up and it’s just that’s just a really lovely experience. I think the third thing is just the constant admiration I have for the founders of these businesses. The incredible hard work, emotional energy that they pour into it, the cleverness that they’ve had with coming up with the ideas and thinking laterally and having to pivot under economic stress. I just find all of that quite inspiring.
Ramia:
Wonderful. A lot of innovation, a lot of creativity. I love that. That resonates with me very strongly. Camilla, additional reasons of why you joined. I’m sure you share many of these feelings with your colleagues but what about your story?
Camilla:
Yes, 100%. I suppose in addition to what Karmen and Robyn have said, is that entrepreneurial spurs and that really quick decision-making, and just getting to know the people and working very closely with them. It just makes for a very interesting feeling of them.
Ramia:
We are living in more fast-moving times than we ever have before, and it is true that with regards to the coupling of technological advances and everything else, we see massive change and massive restructuring of industries, et cetera. Family businesses faced with all of this, faced with a lot of things that are not in their direct control and that they’re subjected to, let’s talk megatrends and let’s have a look here at, what do you think are those major forces that you think are going to have the greatest influence on family enterprise strategies? I’d love to hear from maybe, Robyn, from you first, from an Australian perspective, from your end of the world, what do you feel is going to have the greatest impact on family enterprises going forward?
Robyn:
I think in Australia, at the moment, we’re seeing three probably key pressures on family businesses. First one, which I think I understand to be fairly global in its nature is the labor attraction and retention. Just with COVID, everyone shutting their borders, I don’t know where other people have gone but people tend to have disappeared from every country across the globe and Australia in particular has its lowest unemployment rate in 50 years, and the labor market is really competitive, wages are going up a lot, and it’s really hard to attract and retain people. That’s probably the first one. The second one would be just digitization of business. I think COVID’s really accelerated that with a lot of our family businesses but the piece that probably hasn’t kept pace is the upskilling and the training of I guess the entire staff and bringing them along on that digitization journey. That can be quite a challenge as well. Then probably the third one would be cyber. We’ve had a couple of really significant cyber attacks in Australia. A big private health insurer, big telco, millions of Australians’ private data released, their birth dates, personal data, their passport numbers, et cetera. I guess loss of social license and trust that people have in those organizations I think is resonating a lot throughout the family business community and they’re realizing cyber is not something that you just have as an optional extra. It’s actually really paramount to your customer experience and you need to get it right.
Ramia:
Quite a to-do list. Camilla, do you share these insights from your perspective from Ireland?
Camilla:
100% share all of those. I think another trend that we see is succession and transfers of wealth to the next generation. I think over the next decade or so, there’s going to be huge amounts of wealth that transfers, and that brings with it its own set of challenges, and the importance of governance structures, tax implications, and how to pass that control on effectively.
Ramia:
Karmen for you, of course, because from the Chinese perspective, as well, of course, family enterprises of different ages at a different stage and you mentioned it before facing also different forces at play. What is it like from your perspective?
Karmen:
Well, first of all, I will echo what Robyn has mentioned. This all the factor that presented challenges to the business level, but then the other point that I will make, which is very similar to what Camilla mentioned is about the wealth transition because over the past three decades, China always say we have tremendous growth of wealth and there were many family businesses established during the time, and now most of them are facing the first time transition in terms of wealth and in terms of the family business leadership.
When companies are talking about or family business are talking about how to sustain the family business, hang on, are we talking about passing on entrepreneurship or passing on the family business we are now currently engaged? That evolve in a discussion as whether this is a family business we are into or it is a business family. I’m saying a family should have more discussion about the internal factor, external factor that may affect them, and also prioritize what is important to the family. What are we trying to pass it on? If we are trying to preserve the entrepreneurship, perhaps it’s time for us to visit how to build the business family instead of just focusing on the specific business that they start with.
Ramia:
I love that point, Karmen, because it feeds right into the next question actually, which is, what kind of culture do you need to create and cultivate in a family enterprise today in order to beat these extraordinary odds? What kind of strategies, Camilla, have you seen families apply in the face of such change? A little bit maybe, to Karmen’s point, when is the right moment for a family to say, well, you know what? Let’s transition from strictly looking at ourselves as a family business towards a business family or an enterprising family. What is your view on that?
Camilla:
I heard a great line recently where the family decided they were a family in business because they were having various challenges and that really worked for that particular family and that particular family, they decided to hire an outside CEO so they could really focus on the family and the business separately yet they were still a family in business. For some enterprises, that would work. For others, it won’t. It depends on the situation but for that particular business, it has worked really well and has given them the space to breathe and to allow that person’s right skills to carry the business forward with the bodies that they want. That’s been something that we’ve seen probably more of a trend towards the blog but it’s very much no one size fits all as no one family is the same. It will be each for their own. In terms of adaptability and fast-changing environments and what we’ve seen, we’ve seen that the very successful families, they have a very clear end goal and they know what’s important. Picking out the one or two factors that are really key to nearly every decision and that really has been focused on being agile and quick and still with that clear end goal that they have.
Ramia:
Robyn, similar insights on your end, or do you see different practices in terms of what kind of culture you think actually helps family businesses in Australia and your part of the world to thrive across generations?
Robyn:
I think, for me, I see a real difference between family businesses that are probably in their first generation where there’s a real consolidation of power, decision-making, and control, and actually, you can just make a decision around the dinner table at night, effectively, to when you get to that second and third generation where you probably need to have a little bit more of a formal approach to decision making to keep all the family aligned. I find that those family businesses that actually spend time working with the family members, aligning on values, aligning on vision, as Camilla said, really having a unified position as to what goals they want to kick, they’re the ones that will do better because when something comes and they have to pivot quickly or make a decision, they’ve got great clarity as to what they stand for, where they’re heading, and they’re happy to take a punt because even if it’s not necessarily the right one, they’ve all been aligned together and so inevitably, that glue will keep them together and they’ll be more resilient with that long-term longevity that family businesses tend to have.
Ramia:
When does that freedom become a liability for the business, and to what extent is structuring the business an inhibitor to adapting quickly? Where is that happy medium for the family enterprise today in having good governance, but also being able to move as quickly as the time seem to require?
Karmen:
Actually, I want to echo what Robyn mentioned. Those family who can navigate all these challenges has three things in common. The family value has been aligned, which is very important. What is important to the family? Rather than just focusing on an individual, oneself, or a branch of the family, everybody seems to have a stake, an interest in the family business as they’re passing on to the next generation. It becomes a different dynamic we’re looking into. It’s not the one man, the dad, or mom who are making decision in the dining table, or anywhere in the laundry. It is a collective decision. They need to have a very clear communication decision protocol. Also, if there are a bunch of talents in the family, a new generation, then who will be the leader? We have to make it very clear. In the earlier generation, it shouldn’t be a problem because the one who create the business will have the ultimate decision and responsibility of their decision. Once we have a collective stakeholder in the family business, it became so complex. That clear framework, what we usually would refer to as governance, I think this concept is still quite new to the China markets. People talk about that. People are starting doing some sort of governance framework but what we want to stress is, to have a workable governance, it has to be some actual implementation and execution. It is not a life’s Bible rules or a process that you document it and just put it aside, when an issue comes up, you take it out. It won’t work because you are level living with that decision-making process before.
Robyn:
Absolutely, and as Karmen said, communication is absolutely paramount. We often refer to in Australia and I’m sure you have as well about the concept of socio-emotional wealth and how too often, we’re all obsessed with the dollars that the family business might create but actually, having that glue that really knits the family together, keeping that communication open, clear, transparent, clear identification as to succession, clarity as to values, clarity as to direction, all of that really helps in terms of the governance framework that’s going to make a family business more resilient and be able to make decisions quickly in this world that’s increasingly throwing curveballs at all of us.
Camilla:
Totally agree, and it helps to balance the family dynamics as well.
Ramia:
Do you actually see a stronger presence of women on the family enterprise scene? Do you see more daughters in charge? Do you see more wives getting access to wealth? What does it look like, from your perspective and how do you think it’s going to influence the future of the family enterprise?
Karmen:
The first answer to that is definitely more. A lot more. In Asia, I think the female taking the leadership role in terms of percentage of representation is a lot higher than European and American country. That bring into a very different dynamic. Traditionally, when we look at the role of a female in the family business, usually, they are assigned to take care of the fire outside the family enterprise, such as taking care of the philanthropy activities or organizing family trade. Then, if we look at the natural character, women has learned to be able to juggle many other things at the same time. Multitasking. At the same time, they have the skills of showing concern, and they’re more willing to listen and share view with others. That is a very different management or leadership style compared with the male leadership that in most of the country, we experience and see. Because of that, the female leaders can actually make quick decisions when they lead, and yet they are not losing sight on important things. I believe with a growing number of the women taking on the leadership is a positive change. These stereotypes of the female family, we should avoid distinguishing but taking advantage of the diversity will help bring in a slightly different skill set or perspective. I think we have to admit that all the family member if they’re coming into the business to help and play the role in management, every single one will have slightly different skills and character. Different character brought by the female leadership, it will just helps complement each other to make a better team together.
Ramia:
Camilla, What is it like for you? Are you having a similar experience?
Camilla:
We definitely see more and there’s definitely a trend and operate in that direction, which is great to see. I think what that would bring to family enterprises, the women tend to have a different leadership style just by their nature and I think that will open up the talent pool. When people see different leadership styles, others will be drawn more to that. Hopefully, it will ease the pressures on talent and bring a new way of doing business to those enterprises.
Ramia:
Robyn, what is it like for you in Australia? Do you see an actual increase? Are we just talking quota here or do you feel it in your day-to-day work with family enterprises that women are getting a bigger share of the conversation in decision-making?
Robyn:
Well, it’s all relative, isn’t it? I suppose. I guess if I compare it to when I started my career, family business is very much the women in the family might have been put in accounts payable, accounts receivable, philanthropy and the men run the business. Pleasingly, there is a change in that, and I’m seeing more women involved at the leadership levels. It’s still I think lagging a lot behind where I see listed companies. Possibly that’s because when you look at listed entities, their leadership tends to I guess change over a lot more frequently than perhaps a family business, which is a one-in-a-lifetime change. I think in Australia, for example, we only have about 20% of family businesses that have female leaders, which I don’t know, I think it could be a lot higher. For all the reasons that Karmen and Camilla have said, I think it is important to I guess socialize and educate and encourage young women in family businesses early to have a voice, to step up, to not be afraid to take a leadership role because they do bring a unique perspective and a unique skill with that more holistic leadership style.
Ramia:
Maybe Camilla, from your perspective, do you feel like Irish family businesses or even just European family businesses or more Western family businesses, do you feel today, the systems and the cultures that they’ve set up are actually enabling women to come in and when they’re put into those decision making roles, are they allowed to succeed in the way that they want to or is it still more geared towards you have to almost emulate a male style in order to have the impact you want.
Camilla:
I think every leader brings with them their own styles. I think as long as those women in family business leaders are confident in their own style and have the confidence, they will succeed, but I do agree, there is a lot of stereotyping and unconscious bias, and passing on the business to the firstborn son. I think as time goes on, we’ve seen more and more and will hopefully increase as time goes on towards meritless successors in family business. I do think it needs to start young, as Robyn says, and getting the opportunities, equal opportunities because no business can exist with just males or just females. There needs to be the right balance. I think it’s just allowing the opportunities across all of the younger generation to let them have equal opportunities and then to see based on merit, what comes true from that?
Ramia:
Karmen, for you, and again, very different cultural setting, of course, in China, and in Asian culture, what do you feel are today the biggest challenges that women would encounter if they want to be part of the family enterprise and if they want to be part of its success?
Karmen:
I think it’s the view or the perception more than the actual barrier that I’m seeing happening in the real world now in the mainland. Traditionally, people would stereotype what are women leadership or what women would look like when they’re leading a team of people. In fact, as I mentioned earlier, I think they bring in a slightly different character and these characteristics definitely will do good for some of the corporate culture like being able to more consulting type of decision-making process, listening, explaining the rationale. In particular, for the younger generation, they like to do things with reason. With purpose. Somehow, this kind of female leadership will be able to explain that better to the workforce, to a teammate in order to try everybody to work towards the same direction. It takes time for us to tell whether this is the truth but I think, in view, the actual barrier is not there. It’s more the perception that we have.
Ramia:
Let’s talk about the education requirements that you see to give the confidence to next-gen leaders that they can contribute to the family legacy. In your view, what would that look like? What should that look like?
Robyn:
I guess there’s probably two types of education that we can talk about. The more formal learning and institutional type of learning and it’s probably reasonably self-evident as to what courses women can pick I guess to qualify themselves in terms of running a business. I think, for me, probably what I’ve seen work best with family businesses, and actually in my own career as well is that more informal educational piece, which is really the one that I think can be quite powerful. Having women at board level in the family business, sponsor junior women in the family, having senior women in the family themselves support and encourage and advocate and put forward to and make sure there’s a voice for the younger women in the family, and young women in the family having that exposure to how a board meeting might work, how negotiations take place, being taken along to big transactions and deals, really being there on the ground and having that firsthand experience, which a lot of I guess previously males have had, I think the important thing is, none of us on the call probably want women to be dominant in this area either. It should be more about capabilities, skill set, meritocracy, and who is the best fit for the role, and all I guess that women have ever wanted is just an equal opportunity to ensure that if they are the best fit, well, that they have an equal opportunity to get the role.
Ramia:
Karmen, what do you think is an important education piece here to equip the next generation to become responsible owners and good leaders in the family enterprise?
Karmen:
I think I will take the question as preparing for the next generation, whether it’s female or male, right? The preparation has to start early. Preparing succession would take much longer time than you think you need. Number one, usually my starting point is, do you know if your next generation’s interested to come back and take up the business leadership role? If the answer is yes or no, it lead to a whole lot of different things happening. If the answer is no, okay, you got no choice, sorry. You have to really look at a talent attraction and retention program. You need to be able to acquire the best of the talents in the town to help you run the business going forward. Also, this requires some trust being built between the owner and the executive who’ll run the business for the owner. This, again, you’ll take time to plan for that and make this happen. If the answer is yes, I’m interested to come in. Okay. Think about what experience and what is important for the industry that they are engaging. Some of the industry require a lot of senior guys to go to market, to make up demands, to meet your client or suppliers. As the next generation, the fact is, if they’re young, they’re young. We might need to give them the exposure that Robyn mentioned. Early enough that they know this is important network for the business to be successful. My observation is usually, the business founder will have somehow underestimated time required to prepare for succession. It’s not a matter of whether it’s a female or male. It’s a stretch really the belief that they can take on the role very quickly but in reality, it is not.
Ramia:
Camilla, from your perspective, maybe a view on hard skills versus soft skills that you think are the most key now for the next generation to acquire, whether through formal or informal means, what do you think are those skills for the next generation?
Camilla:
I think the next generation would need to be adaptable. They need to be willing to diversify. There’s lots of things going on in the wider economic environment in terms of businesses may need to diversify to preserve the family wealth and in the next generation, we need to be brave in doing that because if the business has been built up by the current generation, mucher resistance towards change, but that change might be necessary to preserve the wealth on a long term basis. As business is passed down to the generations, bouncing that family dynamic will become extremely important. Leaders will need to have the strategies to help them to do that and to be mindful of that. Also, they will need to be able to deal with uncertainties going forward.
Ramia:
What is your piece of advice for family business members that are in their family businesses today? Is there any universal piece of advice you have for a family business member where you were like, “You know what? This is what you should focus on for yourself or for your family in order to have a positive impact on its future.” Karmen, maybe some wisdom from China here will be welcome.
Karmen:
Have an open discussion about the succession plan. That would happen sooner or later. There’s no harm to start the conversation early so that everybody get prepared, got time to really discuss what’s best for the family and the business. The communication within family, especially as passing on generation is definitely have a very different dynamic as more family member has a stake in the family business. How to define a successful family is important. Family business is only one part but more importantly, is the family. We have the legacy, the successes, maybe that define the family to the public but at the end of the day, the family is themselves and know what is important to them. This communication is also very important.
Ramia:
Camila, from your end, a piece of wisdom for the family business members and leaders listening to this?
Camilla:
Find that mentor. Having mentorship is really valuable. You always look through and take on a leadership role. As well, finding that network that you can talk to and consult with. Being able to talk with like-minded people and people know what your challenges and opportunities are. That’s really important. Mentorship and network I think are huge.
Ramia:
Excellent. Robyn?
Robyn:
I do think one of the tendencies in family businesses that I see is because they’re incredibly proud, rightly so of the legacy of the business that’s been created and the tradition and the family roots in the business, there sometimes can be a reluctance to change and to maybe adapt as much as they need to. I think Camilla was spot on in terms of leaders of those businesses needing to have that adaptive mindset, be looking for what’s coming around the corner, and pivot HR decisions. In that regard, setting up those governance frameworks to I guess encourage that to happen and facilitate that is really important. I guess, just on the topic of today, we’re really encouraging to see more women at the helm of family businesses in the future and just I guess the benefits that that brings and the change in leadership style that we might see.
Ramia:
Wonderful global advice I would say that applies to any region, any family business anywhere. Don’t resist a pivot, get enough mentors and network yourself well, and of course, talk, talk, talk succession, and don’t let it creep up on you unexpectedly. Karmen, Robyn, Camilla, thank you so much for joining us on Women in Family Business today.
Robyn:
Thank you, Ramia.
Camilla:
Thanks, Ramia.
Karmen:
Thank you.
This interview is part of the special series “Agile Minds: How Family Enterprises Evolve” in collaboration with KPMG Private Enterprise.
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