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On 6-9 June 2017 we held our largest annual gathering, the IFB National Conference. We gathered in York with over 150 family business owners and experts from the UK and abroad to explore the keys to family business success across generations.
This event offered business families and family businesses the opportunity to connect, share lived experiences and learn together in a safe environment with like-minded people. It was great to see so many younger family members participating so actively throughout the event, taking the opportunity to learn about important family business issues and meet, or catch up, with old friends and new.
As part of this year's Conference we introduced the Family Business Learning Journeys. This new initiative gave delegates the chance to visit some of Yorkshire’s greatest family businesses, including Bettys & Taylors, Aunt Bessie’s and Rudding Park. Participants took part in exclusive tours with the owners and learned about the history, values and workings of these firms, visiting a brand new spa, tasting tea and gaining insights into the manufacturing process of Yorkshire puddings.
The Conference programme, running over two days, explored the pillars of family business success, focusing on people, communities, the environment and future generations. Through insightful plenary sessions, interesting panel discussions and interactive workshops, delegates discussed past and current trends, and looked to the future to explore new questions and find new ways to best prepare for what lies ahead.
Once again we held Open Space sessions, where delegates raised some of their most pressing questions and discussed them openly in small peer-led groups, with others who were holding the same questions. It was inspiring to see such engagement, energy and interest, and to hear many interesting insights on key issues as next generation engagement, succession planning, family values and non-family management. You will be able to read some of the insights in the summary below.
Individuals and Systems: Burden and Purpose
Family businesses often face the challenges of managing different forces, those of the collective and of the individual.
Often, understanding how to find a way to be part of the family group, and being an individual within a family business system, means putting duty above all. However, this can become a burden. As highlighted by one of our speakers, families can often fall prey of adopting the “under the burden, there is no rest” motto.
To overcome this challenge, it is important that shareholders ask themselves questions like “why do we own as a family?”, “why do I own?”, “why does our organisation exist and how are we building resilience into it?”
Thinking holistically about financial and emotional issues, including share value, shareholder value and values, but keeping into account different personalities, priorities and ways of learning is crucial to answer these questions and find the purpose behind ownership. The graph on the right illustrates a continuum along which family business owners can find themselves, and will help a family understand others' motivations.
This approach, which includes individual journeys, learnings and opportunities, and open and honest dialogue amongst everyone living the consequences of family business decisions, will allow the motto to shift to “we own because we want to and because it makes us feel good”, as highlighted by one family's journey. Finding one family's own positive motto will in turn drive increased sense of belonging and engagement across the family business.
It is also key to look at the ways in which owners own, and to ask oneself questions like “how do we own?” and “what do we do when we own?”.
Past and Future
Because of their multigenerational approach, family businesses naturally look to the future, not thinking in quarters, but quarter centuries. In this process it is important to consider the past and how values and heritage will continue to influence the work of family businesses in the future.
Strong values are embedded in family firms and how they operate. It is because of their lived values and long-term outlook that family firms are, in turn, so embedded in their local communities, have a stronger reputation and are generally more trusted. This unique character offers family businesses a great source of competitive advantage.
As values are crucial when looking at how the past influences the future of family business, it is important to look ahead with dynamism, thinking about the possibilities and opportunities for continuing differently, to remain successful through changing times. Professor Maura McAdam invited to think of the 'soft issues', like values, as being the 'hard issues', stressing that doing this can open the way to thinking differently.
To overcome the challenge of the 'soft issues', having the right form of governance in place is key. Whether the firm is run by the family or not, good governance helps to ensure that the objectives of individuals, family and business can be aligned. And for governance structures to remain relevant, it is important these are not seen as static, but as ongoing processes. A process with the flexibility to evolve, based on the changing needs of the family and the business.
Accompanied by open communication across all stakeholders, good governance facilitates a clear understanding of who does what and why in the family business, in turn helping to avoid misunderstandings and potential conflict.
Family and Non-Family Alignment
One key question for many family firms is how non-family directors can lead the firm with the same values as the family would. At Bettys & Taylors Group introducing leadership teams to the history, values, purpose and workings of the family business through learning journeys to where the firm began has proven crucial. Giving them the opportunity to ‘see through the eyes’ of the family has helped non-family directors to align to the core values of the family business.
In the case presented by another speaker, the family sets the tone through their values, whilst leaving the running of the company to a senior non-family executive team. One powerful way of ensuring the management team keeps acting in alignment to their values is to ask: would you be comfortable if what you do were to appear in the newspapers? And where the family is involved in running the business, forming a strong bond with non-family is equally key.
One important question raised during the conference is how a family business can remain a family business when the family stops running it. One way to do so is to adopt the right governance models to help drive and maintain family input. These may include employing family non-executive directors or setting up a Family Council.
Others highlighted the importance to build the capacity and engagement of shareholders, the next generation and employees. For instance, Bettys & Taylors hold New Year’s Honours, which are presented by the family to the business.
It is also crucial to outline values and structures in a written document, like a Family Constitution, which is owned by the family and embraced by the business.
The Role of Employers
Another key element in ensuring family business success in the long-term is creating a work environment that is conducive to good health and well-being. As highlighted by Matthew Taylor, Chief Executive of the RSA, family businesses, with their intrinsic values and commitment to their people and communities, have the opportunity to become ‘Creative Communities with a Cause’, where individuals driven by creativity, pride in craft and growth work together, under common norms and values, to constructively create purposeful ends and outcomes.
The family business model is the oldest business model in existence, and it continues to be extremely powerful. Over two thirds of firms globally are family firms, and their contribution to the economies and societies is indisputable, yet often not well known.
In changing times like these, where we face many societal, economic and environmental challenges, family business owner and President of the Portuguese Family Business Association Peter Villax called for family businesses to lead the way in job creation and innovation. One way to do so may be by asking catalytic questions about our future and that of our business, as emerged during one of our panel discussions on the long-term outlook of family businesses.
The question of when and how to engage the next generation is key to family businesses, and whilst there is no one-type-fits-all model, insights emerged during the Conference highlight common challenges and opportunities.
As emerged during one of our workshops, having strong values and communicating them clearly across the generations, adopting the right forms of family business governance and being innovative through time is essential to attract a young and passionate workforce.
As documented by a recent report by the IFB Research Foundation, key is also creating spaces for younger family members to learn and develop, both within and outside the family business. Whilst external experience can provide them with relevant skills and increased credibility within the firm, it is also crucial for them to gain exposure to the family business, and create development plans for them to grow and make free choices. Taking into account the individual skills and passions as well as business needs is also crucial in order to ensure that each role within the firm is well managed and is the best possible fit.
To find out more about National Conference or how IFB can support your family business, contact email@example.com or call 020 7630 6250