2023 has seen the largest family growth increase in family businesses in 15 years.
According to an article I read over the weekend by Pricewaterhouse Cooper, it’s down to the modernizing of family business governance.
A couple of things really stood out to me:
It said, “73% of family businesses that experienced double-digit growth over the last financial year are those with a clear set of family values and an agreed purpose for the business.”
Secondly, the evidence is clear around the link between growth and a strong Environment, Social and Governance (ESG) strategy. And not just by small margins. Half of the businesses surveyed said they’d experienced double-digit growth!
But what does business governance mean in modern family businesses?
Well, the same article gave some examples. It showed that approximately half of the high-performing family businesses have:
- Employee incentives
- Boards committed to diversity (especially by including non family board members)
- Strong digital capabilities
Focusing on these areas is key to internal harmony and it’s also a huge factor in trust among customers.
But ESG alone is not the solution. It forms part of a bigger purpose. It serves to build trust. This is crucial because research shows that customers trust you more. The article states that trust increased by over 25% in businesses that had one compared with those that didn’t.
But despite the positive impact a strong ESG strategy has, over two-thirds of family businesses put little to no focus on it.
What about you, and yours?
Are you focused on building trust with your employees and customers? Do you know how to, or is this something you need help to achieve?
This is where I come in. I’ve spent years helping lots of family businesses to establish and modernize their governance, with fantastic results.
If you’d like to know more, visit my legacy planning page or get in touch with me.