Leadership in family business
27th May 2022
The importance of business leadership has been highlighted to a rare extent over the last couple of years. Brexit, lockdown and global change have brought unprecedented challenges.
Business leaders have needed to keep calm, think independently and plan for all contingencies. They have also needed to exhibit leadership in steadying the ship, reassuring staff, customers and suppliers.
Leadership is never easy but challenging times expose the quality of it. We have felt this in our own business: prioritising as best we can the needs of our people and our clients through two years of turbulence and relying on contingency measures and systems in place
All businesses have struggled during the pandemic but many have excelled. Several of our family business clients faced daunting circumstances, particularly those in the leisure sector.
For one of our clients, business dropped 90% at the start of the first lockdown. However, the focus on good communication, strong relationships and looking after people, including the wider community, has had a long-term positive effect, generating loyalty, job satisfaction and a sense of security.
This is a common story for family businesses and shows the secret weapon of their culture and value. If evidence were needed, this is why family businesses are so important to the UK economy
Leaving aside the difficulties of the last couple of years, leadership is a central issue for family businesses both within their own business and more widely.
Within the business
Leadership within a family business has further dimensions and challenges to a non-family business. Family issues can easily become stumbling blocks or there may not be a clear allocation of decision-making power.
There is the need to keep business strategy aligned with family needs and keep family members motivated and united by a common vision.
A strong governance framework will help to ensure effective communication and good decision-making. Good planning is also important and many aspects will be second nature to family businesses:
- Agreeing the purpose and vision of the business. Successful families and businesses are held together by a common set of aspirations and values, such as sustainability, legacy, community, ethical business.
- Taking active steps to draw the family together; encouraging participation and recognising potential areas of friction.
- Reviewing business and family governance arrangements regularly to ensure the systems remain fit for the changing business and family needs.
- Setting expectations in all areas both for family and non-family members.
- Encouraging and preparing the next generation to lead the business, and being transparent and fair about deciding who is best to step into management roles.
These tasks are hard to get right and may not be pleasant to take on and work through.
Good leadership here is recognising the need for these things, setting the process to put them in place and keeping everybody on track.
Leaders have many competing demands on their time and we see success coming from those who are able to spend (or make themselves spend) time on these difficult transitional elements, rather than other more familiar and comfortable aspects of the business.
Family businesses with strong management systems are also well placed to exhibit leadership to the community more widely and encourage positive change. Because the family business is regarded as legacy and is likely to be carefully managed to achieve long-term growth, there is a desire to manage issues and greater recognition of the importance of all stakeholders in the business.
We see many family businesses united by a common purpose and values being a force for positive change, from encouraging apprenticeships, supporting employees and the community, championing sustainable business and nurturing talent.
At last year’s IFB annual conference Mark Stevenson encouraged the audience to lead the way in diversity and innovation and think about ‘what is your impossible’? Family businesses are ideally placed to do this. Family businesses with great leadership are even better so.
Family businesses have the longevity, vision and independence to survive and to lead. We are very proud to help and support our family business clients in the many ways that they do this.
Partner (Tax and Trusts)
+44 (0) 7980 768 202
Senior Associate (Corporate)
+44 (0) 7968 386 519
Burges Salmon is an ambitious, sustainable and inclusive firm that ensures its clients, people and wider communities flourish. Our award-winning Private Wealth team is nationally recognised for providing clear and practical legal advice and is one of the largest in the UK. Our experienced Family Business experts advise family businesses of all sizes across a range of sectors. We are renowned for our open and pragmatic approach, delivering straightforward solutions to what are often complex family business issues.