What are the Benefits of Community Engagement Activities for Family Businesses?
16th April 2021
The IFB Research Foundation’s annual family business Sector Report shows that family firms play a critical role in the UK economy. We have seen the strong and resilient qualities in families and businesses throughout business history, and their success has made them the backbone of the economy and major tax contributors.
However, the social and community impact of family businesses has not been widely examined in the family business research field. Community engagement is becoming more important for family business governance.
The IFB Research Foundation commissioned researchers from the Universities of Birmingham and York to carry out an in-depth study of the how family businesses in the UK engage and work in collaboration with their diverse communities. A new report, Family Business and Community Engagement, looks at the benefits for family firms of closer involvement with their communities and examines the different ways they engage with them. It shows how family firms’ community activities are grounded in long-term relationships with a variety of different communities and organisations, and not only those local to where they operate. Family businesses often make significant contributions to the communities they are embedded in, including making financial and in-kind donations, encouraging employee volunteering, providing business management advice and expertise as well as sharing other skills, making environmental improvements, and supporting local business and community organisations.
From family business perspective, there are several benefits that family firms could gain from such activities.
First, community engagement activities and collaborating with community-based organisations can foster trust between the business and its stakeholders, and there can be reputational benefits as well. Such activities can help to communicate the business family’s core values to its communities and stakeholders, and develop their understanding of both the family and the business. As well as reputational benefits, investing in such relationships and social impact may make the firms more resilient and sustainable in the long-term.
Second, community engagement and action to improve social outcomes may help to engage the next generation of the family business. It may facilitate the communication of the business family’s values to younger members of the business family, offering them valuable opportunities to gain new skills and experience, learn more about the family business and its relationships with key stakeholders, and contribute to enhancing the business’ reputation and social impact.
Third, as the new report shows, there can also be benefits for the family firms’ employees. After all, many of the people living in the community may be employees or directly related to employees. There are potential benefits for both professional development and motivation. Encouraging employees to participate in activities that contribute to positive social or community outcomes may enable them to develop new skills, can help build confidence, and increase their motivation and loyalty to the firm. Providing young people from the local community with opportunities to work in the family business, to learn and develop their skills, may bring benefits for the business in long run.
Along with the research report, the IFB Research Foundation has also published new evidence-based guidance and has produced some detailed case studies illustrating how family firms can enhance their social and community impact. For example, it is important to plan such activities carefully, defining clear goals and the desired outcomes for both the community partners and the family business, identifying how these outcomes will be delivered. The firm’s community engagement priorities may sit within a broader corporate social responsibility strategy.
A key challenge is how to define and measure the outcomes of a firms’ community engagement activities and the social impact of its activities, and the new report and guidance provide some practical suggestions for how to do this.
It is important for family firms to communicate how they are engaging with their communities and the outcomes of such activities, particularly among those communities themselves. For example, activities and their impact can be reported through a Corporate Social Responsibility report, a separate community engagement or social impact report, through press releases, social media and website news pages, as well as internally within the organisation.
Finally, the research also showed that family firms can successfully deliver their community priorities and enhance their social impact by supporting business umbrella organisations or work in partnership with charities, NGOs and grassroots community organisations, such as community foundations. This can potentially benefit family businesses that want to raise awareness of their brand in other regions or countries.
In summary, community engagement and a focus on social outcomes can bring great benefits to family firms and the communities they form part of. Community engagement is becoming more important from a corporate governance perspective. But we still need to understand more about the impact of family businesses’ operations on communities and how they engage with their communities as well as ‘what works’ in different circumstances.
The full report is co-authored by Dr Jane Glover and Professor Kiran Trehan, Family Business and Community Engagement for the IFB Research Foundation in August 2020 and can be downloaded here.
The case studies and a short checklist to assist in the planning of community engagement activities can be accessed here.
The IFB Research Foundation’s 2020 Family Business Sector Report can be accessed here: