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Family affairs: the challenges of modern business

With family businesses contributing so much to the Irish economy, we take a look at the top five trends in family firms in 2019

‘The senior generation in family business will, on average, live longer than at any time in history.’ Photograph: iStock

‘The senior generation in family business will, on average, live longer than at any time in history.’ Photograph: iStock

 

The challenge of the 100-year life

Ken McCracken, Family Business, KPMG in Ireland: “The senior generation in family business will, on average, live longer than at any time in history, so what effect will this have on the transfer of ownership and leadership from the senior generation to the next generation? Allied to this is what the senior generation will do if they ever retire in order to have a meaningful life. What roles could they have in their own family business – possibly as an ambassador, or in the wider family business community as a mentor, perhaps?”

Sustainability

Angela Ruttledge, co-owner of Woodstock Cafe in Phibsborough, Dublin: “Sustainability starts at home – as we try to do our best for our children and protect their future, we start looking at living in a more sustainable way. We are learning for ourselves and teaching our children about how to minimise the damage that we are doing to the planet. Sometimes they are teaching us. The more we learn, the more it affects the way we think about our whole business. At the moment, we are very focused on encouraging people to eat more plant-based foods, on reducing the waste we produce as a food business, and on recyclable and compostable packaging. We are actively engaged with our suppliers – many of them family businesses too – and everyone is talking about this.”

Non-family leadership

Dr Eric Clinton, director of the National Centre for Family Business, DCU: “There is a willingness to engage non-family in senior leadership roles, as long as they can understand and respect what the family are trying to achieve through being in business together.

“There are two types of family business – family-first family businesses and business-first family businesses. The second reduces things like nepotism and altruism – you’re not entitled to work there just because you have the family name. It’s about integrating non-family too.”

Trust

Dr Eric Clinton: “Statistics suggest that in first- and second-generation family businesses, only one-third of family businesses will survive. In second- and third-generation family businesses, only 12 per cent will survive. That’s not always down to an economic reason, and is often to do with family issues, emotions, or disagreements. If trust breaks down, then emotions can become involved, especially between the current generation and the next generation, sibling partnerships or even cousin consortium – cousins may not know each other that well, therefore the levels of trust may not be there.”

Attracting talent

Olivia Lynch, partner, KPMG Private Enterprise: “A significant challenge that can face many family businesses in Ireland as they experience successful growth is the ability to attract and retain executive and managerial talent. It can be extremely challenging for family businesses to compete with public companies ,which tend to have more options available to them to offer equity participation. The KEEP [Key Employee Engagement Programme], a share-option scheme for SMEs, was a welcome introduction to assist SMEs and family businesses in addressing this challenge. However, the qualifying conditions for the relief are restrictive in its current form. It has been acknowledged that the uptake of the relief was much less than expected and following the recent public consultation, we would be hopeful that this relief would become more accessible for family businesses.”