Labour and skills shortages are the biggest priorities among UK family businesses
Labour and skills shortages are the greatest internal challenges facing UK family businesses.
With only 40 percent of family businesses experiencing a growth in product demand this year, the emphasis has shifted to skills and talent as cashflow and margins are put on the backburner.
These were the findings of PricewaterhouseCooper’s Family Business Survey, Kin in the Game
, which is based on interviews with 6000 executives at more than 1600 small and medium-sized family businesses in 35 countries.
The survey found that 32 percent of UK firms do not have succession plans in place for key senior roles. This compares to 39 percent of US firms and 60 percent in Italy and France, whereas in Germany, over half of firms have succession plans in place.
Increasingly, successors may come from outside the family. Twenty two percent of UK firms anticipate a change in ownership within five years. Of these, just 36 percent will pass the firm onto kin.
The firm’s future direction is the biggest source of internal conflict, with performance of family members coming second.
Michael Rendell, head of HR services at PwC, said: "Skills shortages are a huge problem for all employers, but for family firms, fighting the war for talent is arguably more challenging. Smaller businesses have fewer resources to throw at training or marketing, for instance. It's a vicious cycle, as improving skills often requires funding firms don't have right now, yet without vital labour, businesses will find it hard to move out of the doldrums. "Our report shows that family firms recognise the importance of talent for future growth and this is why they rank skills shortages as their most significant challenge.
"In family businesses, knowledge and skills are often built up over generations and become firmly entrenched, so there is a huge amount at stake when someone leaves. Our experience suggests succession planning is being taken increasingly seriously, but there is still some way to go. The best succession plans are working documents that clearly define the skills required and map these continuously against potential candidates.
"Conflict can be particularly divisive in family firms, so it is concerning that seven out of ten businesses do not have conflict resolution procedures in place. Of the firms that do have an established means of diffusing tension, third-party mediation is the most popular option. An impartial adviser can often provide the best means of diffusing conflict, particularly where emotions run high."