Login / Register
Institute for Family Business (IFB)
  • Login / Register
  • 020 7630 6250
  • info@ifb.org.uk
  • About Us
    • Who We Are
    • What We Do
    • International Network
    • Partners
    • Contact us
  • Membership
    • Why Join Us
    • Membership Benefits
    • Next Generation Hub
  • Events
  • Conference
    • Sponsors
    • Speakers
    • Interactive Sessions
  • Resources
    • Sign up to the eBulletin
    • For Owners
    • For Managers
    • For Next Generation
    • Succession Planning
    • SMEs
    • Podcast
    • Videos On Demand
  • News
  • Advocacy
    • Influence
    • About Family Business
    • Media
    • APPG Family Business
  • IFB Research Foundation
    • About IFB Research Foundation
    • Family Business Challenges
    • Publications
    • News
    • Briefings
    • Case Studies
    • Articles
    • IFB Research Foundation Events
    • Contact IFB Research Foundation
  • Resources
  • Advice For Family Business Managers
  • Is Family Business Long Termism Having ‘a Moment’?

Is Family Business Long Termism Having ‘a Moment’?

by Gary Deans, KPMG

29th July 2015

For many moons those running family businesses have spoken of how their long term perspective sets them apart from other business ownership structures in terms of how it influences their corporate behaviour and strategy.

But this summer, as Andrea Illy, Chairman and Chief Executive of famous family owned coffee business, Illycaffe, confirmed why his business was not going to pursue a stock market listing, his views chimed with those of one of the country’s most senior banking figures and a potential presidential candidate. I do believe the long termism so close the heart of many family firms is ‘having a moment’.

According to the Financial Times this month Illy said: “We are a family business and we have two things to protect. One is the dream of the founder to offer the greatest coffee in the world and the other is our family name. This requires a long-term vision and cannot be achieved with quarterly results.”

There’s arguably an element of exaggerating to make a point here as the extent to which European companies need to communicate with the market at these intervals is fairly limited – thanks to the Barnier Commission, which scrapped the requirement for formal quarterly financial reporting for the very reason that it was deemed to risk damaging good quality, long term decision making.

However the point remains – this family business demanded the freedom to pursue long term objectives without the interim pressure of shareholder judgement at regular intervals.

And who can disagree with Illy’s position when just days earlier the Bank of England’s chief economist, Andy Haldane raised a similar concern?

In a BBC interview he expressed a view that companies risk "eating themselves" as shareholders and management are gripped by a form of short-termism. He went on to link this point to relatively weak corporate investment.

And this summer has also heard Democratic Presidential nomination candidate Hillary Clinton talk of how the US system of ‘quarterly capitalism’ is “out of balance”.

Illy’s comment sums up what makes many family businesses so special, and at the same time misunderstood.  Long-term focus doesn’t fit well with short-term markets. The growing sense that we should encourage more long-termism is sure to be welcomed by the many successful family businesses that take pride in this approach.  The model won’t suit every business but there are lessons to be learned through the study of a renowned brand such as Illycaffe.

With family owned firms estimated, by the Institute of Family Business, to contribute a quarter of the UK’s GDP, corporate cultural shifts or indeed policy changes that support their approach stand to make a significant economic impact.

Gary Deans is UK Head of Family Business at KPMG.

Tweet
 
  • Membership
  • Advocacy
  • Privacy
  • Accessibility
  • Terms of use
  • Twitter
  • LinkedIn
  • Youtube
    • Family Business Podcast Partner
    • Rural Business Awards Partner

Proud members of Family Business Network International (FBNi) and European Family Businesses (EFB)

  

Copyright © 2022 Institute For Family Business. All rights reserved.

Company number: 4258666 Registered office: Institute For Family Business (UK), c/o Farrer & Co, 66 Lincoln's Inn Fields, London WC2A 3LH

  • Contact us