Leadership in unprecedented times
22nd April 2020
Loyalty tends to run deep in a lot of family businesses, and so people will want to do the right thing. But they need to guidance to do so, particularly in times of uncertainty. “It’s all about leadership right now. People are looking to management for signs of concerns, signs of stress, just trying to interpret any signal they can,” says Andrew Priest, Partner at Inflexion Private Equity. For this reason, now more than ever, leaders ought to project resolute stoicism, exuding calm and control despite what may be occurring beneath the surface.
The loyalty often felt by staff, many of whom are very long-serving, means communications and leadership is of utmost importance in family businesses. “With so many unknowns and with the workforce working remotely, we are unable to exert as much control as we are used to. But what we can control is our reactions to things, and it’s important that leaders choose their responses carefully.”
This calm should not belie the urgency of the moment though; honesty is paramount. And this helps with engagement, which stems from being straightforward and collapsing hierarchies that often exist within family businesses.
"Everyone knows the reality of the external situation and most people will know how that is affecting their companies, so you really need to be transparent with people and how it affects them and how they can contribute to make things better."
When so much is happening, it’s better to spread responsibility across a wider group as this enables people to focus on a smaller number of things. Lines of responsibility need to be effectively communicated throughout the team, with each member feeling empowered and trusted to work towards the company aims.
On the financial side it’s about making sure you have the right short-term KPIs and that you’re tracking them. “They won’t necessarily be the same as before, they need to be realistic and reviewed daily. Cashflows should also be monitored ever more closely.”
This shorter-term goal-setting needs to be reflected on the people side of things, too. “You need a contingency plan: what happens if someone falls ill, or if they need to step away to look after a family member? You need to think about employees as well, who are harder to monitor when working remotely. Are they productive, engaged and happy? Throughout all of this, it’s about remembering the human side of it.”
A so-called ‘wizardry of technology’ as Boris Johnson coined it has enabled remote working, and cast a positive light on the impact digital can have on companies. “I’ve seen a big shift in tech adoption that I thought would take months, but it’s taken a week,” Andrew says, pointing to the uptake of software such as Teams or Zoom and CRM systems. “Companies will only realise the productivity improvements that have happened over the coming years. But there are already some real positives and that may continue.”
And while most decisions being taken now are focusing on the urgency of the situation, it’s important to remember that decisions you make now don’t just affect the business during the crisis – it informs sentiment and success in the longer-term, too.
“Stakeholder relations are impacted by your actions today, in all businesses and especially family-run ones, which tend to thrive on loyalty. People – both customers and staff – will look back at the decisions and actions of management, and it will strongly influence relationships between management and employees and company and clients.”
While we don’t know when it will be or precisely what shape it will take, preparing for the eventual upturn is crucial for a business’s growth. “You need to maintain the muscle of the business so that you can act swiftly when the exit does come.”
For now that means small steps, such as daily calls with staff, chatting about actions you’ve discussed with groups, sharing ideas, talking to customers and news people have heard. “Get people working on a few things that have some near-term benefits. Then you should be able to emerge from this stronger.”
Communicating is a two-way street
Family businesses can differ to other corporates in a number of ways, not least the longevity of staff often inherent in companies run by a founding family. Therefore, it is crucial that trust runs through the company structure, both upwards and downwards, and that communication is frequent and compassionate. “Nowadays the leadership team must demonstrate good behaviour and communication skills in this new and virtual world because no one has done it before. This means daily communications from management,” says Andrew. And this information flow and openness ought to be two-way: “Sometimes in hierarchies you get a lot of communications pushed down, but not the opportunity for employees to ask questions upwards. They need to feel they can put their hands up and be heard.”
It needn’t be all business chat, either. With everyone seeing their homes become their offices and their outings curtailed, it is important to maintain the social aspect of work. Andrew says one of his colleagues is tasked with running social boards and virtual drinks. “It helps keep the team feeling connected and fosters camaraderie, which teams need to thrive.”
Inflexion is a mid-market private equity firm, investing in high growth, entrepreneurial businesses with ambitious management teams and working in partnership with them to accelerate growth. Inflexion’s flexible approach allows it to back both majority and minority investments, typically investing £10m to £250m of equity in each deal.
With bespoke teams and dedicated capital, Inflexion’s funds invest across all sectors from offices in London and Manchester. Inflexion helps businesses achieve the next stage of their development through international expansion, operational improvements, digital expertise, access to Inflexion’s networks and funding for acquisitions. It benefits from regional experts covering Asia, Latin America, the Middle East and North America dedicated to portfolio development, enabling investee companies to benefit from privileged access to these fast-growth markets.