Mix­ing fam­ily and busi­ness need not be a recipe for dis­as­ter

The Irish Times - Business - - WORLD OF WORK - Eric Clin­ton & Martina Bro­phy Dr Eric Clin­ton is an as­so­ciate pro­fes­sor in en­trepreneur­ship at DCU Busi­ness School and di­rec­tor of the DCU Cen­tre for Fam­ily Busi­ness. Martina Bro­phy is a re­search as­sis­tant at the Cen­tre for Fam­ily Busi­ness

From your morn­ing cup of Barry’s Tea to the Fla­ha­van’s Por­ridge Oats you ate for break­fast – pos­si­bly sourced from Dunnes Stores or Su­per­Valu – to your of­fice heater made by Glen Dim­plex, fam­ily busi­nesses are all around us.

Ac­cord­ing to the lat­est fig­ures from the DCU Cen­tre for Fam­ily Busi­ness, sourced from Cen­tral Sta­tis­tics Of­fice data, fam­ily busi­nesses ac­count for 69 per cent of Ir­ish-owned busi­nesses in the ser­vices sec­tor.

The land­scape of indige­nous Ir­ish fam­ily busi­nesses varies in size and growth am­bi­tions, with firms demon­strat­ing their abil­ity to com­pete both na­tion­ally and on the global stage.

While aware­ness of this sec­tor has risen, fam­ily busi­nesses’ col­lec­tive con­tri­bu­tion to the Ir­ish econ­omy is per­haps un­der­rated, as are the char­ac­ter­is­tics that make fam­ily busi­nesses unique.

What makes fam­ily busi­nesses unique?

Fam­ily busi­nesses have unique op­por­tu­ni­ties and chal­lenges that emerge from one im­por­tant dif­fer­en­ti­at­ing fac­tor – fam­ily in­volve­ment.

“Sur­viv­abil­ity cap­i­tal” is a term as­so­ci­ated with fam­ily busi­nesses and their abil­ity to en­dure ad­ver­sity.

“Go­ing above and be­yond is of­ten a feature of those who work in fam­ily firms, due to fam­ily busi­nesses’ in­nate abil­ity to con­nect staff to the fam­ily mis­sion in a tightknit work­ing en­vi­ron­ment.

Glen­non Brothers, a 104-year-old fam­ily owned and man­aged tim­ber pro­cess­ing firm, ex­pe­ri­enced a ma­jor fire in 2004 that de­stroyed their pro­duc­tion fa­cil­ity in Long­ford. Both fam­ily and non-fam­ily banded to­gether, as 30 em­ploy­ees vol­un­tar­ily re­lo­cated to Fer­moy, Cork, to run their other fa­cil­ity on a double shift. As tes­ta­ment to their ef­forts, pro­duc­tion fell by only 5 per cent in the fol­low­ing year.

Fam­ily busi­nesses are also in­clined to think long-term for a range of rea­sons; a de­sire to be multi­gen­er­a­tional be­ing an im­por­tant one. At 200 years old, Fla­ha­van’s is one of Ire­land’s old­est fam­ily busi­nesses. Its longevity is down to the fam­ily’s abil­ity to in­no­vate for a chang­ing mar­ket while re­tain­ing time-hon­oured tra­di­tions and val­ues.

In 2013, for in­stance, Fla­ha­van’s part­nered up with McDon­ald’s to be­come the ex­clu­sive por­ridge oats sup­plier to the fast food restau­rants na­tion­wide.

Fi­nally, fam­ily busi­nesses are sig­nif­i­cantly em­bed­ded in their com­mu­ni­ties, pro­vid­ing em­ploy­ment, work­ing with lo­cal sup­pli­ers and spon­sor­ing community ini­tia­tives, with many fam­ily busi­nesses spon­sor­ing GAA teams across Ire­land.

Trad­ing on the fam­ily name

Re­cent re­search con­ducted by global pub­lic re­la­tions firm Edel­man re­vealed that fam­ily busi­nesses are the most trusted of any busi­ness-type world­wide, ac­cord­ing to 75 per cent of those sur­veyed.

Fifty-one per cent of re­spon­dents in­di­cated that be­ing a fam­ily busi­ness is im­por­tant to pur­chas­ing de­ci­sions.

Her­itage is a huge strength of fam­ily busi­nesses and fam­ily af­fil­i­a­tion can be lever­aged to con­nect with con­sumers. Think of “Old Mr Bren­nan” of the fam­ily com­pany, Bren­nans Bread, Keogh’s crisps made from the pota­toes grown on the fam­ily farm, or the Keel­ings Group that has pro­gressed from sell­ing fruits and sal­ads to lo­cal Dublin mar­kets in the 1930s to grow­ing and sourc­ing fresh pro­duce world­wide.

The Love Ir­ish Food cam­paign has helped to mo­bilise sup­port for buy­ing lo­cally, and Ir­ish con­sumers are in­creas­ingly con­scious of food trace­abil­ity, in­ter­ac­tion with the seller and sup­port for smaller pro­duc­ers. Fam­ily busi­nesses stand to ben­e­fit from this sen­ti­ment, which puts them at an ad­van­tage over for­eign multi­na­tional pro­duc­ers.

The chal­lenges of mix­ing fam­ily and busi­ness

All busi­nesses face ad­ver­sity but fam­ily com­pa­nies have to con­tend with ad­di­tional chal­lenges unique to com­pa­nies owned and man­aged by fam­i­lies. They can face dif­fi­culty in re­cruit­ing non-fam­ily tal­ent. Non-fam­ily man­agers re­fer to the glass ceil­ing in fam­ily busi­nesses, where the CEO po­si­tion is pre­dom­i­nantly re­served for fam­ily suc­ces­sors only.

Since share­hold­ing is typ­i­cally held within the fam­ily, salar­ies for non-fam­ily staff need to com­pen­sate for this in or­der to at­tract and re­tain tal­ent.

From mi­nor dif­fer­ences of opin­ion right through to ma­jor fam­ily events such as death or divorce, fam­ily dy­nam­ics can chal­lenge the com­pany. And suc­ces­sion can be one of the most tur­bu­lent mile­stones in a fam­ily busi­ness.

Ac­cord­ing to a PwC 2016 Ir­ish Fam­ily Busi­ness Sur­vey, half of Ir­ish fam­ily busi­nesses ad­mit to hav­ing no suc­ces­sion plan and only 14 per cent have a plan that is ro­bust, doc­u­mented and com­mu­ni­cated.

While trust and ef­fec­tive com­mu­ni­ca­tion are key, for­mal struc­tures and agree­ments (for ex­am­ple, fam­ily con­sti­tu­tions) are crit­i­cal to fam­ily busi­nesses suc­cess­fully nav­i­gat­ing fam­ily dy­nam­ics.

Fam­ily busi­nesses not only sur­vive, they thrive and count among our most suc­cess­ful indige­nous com­pa­nies. With proper plan­ning and struc­tures, fam­ily and busi­ness can, and do, mix well.

All busi­nesses face ad­ver­sity but fam­ily com­pa­nies have to con­tend with ad­di­tional chal­lenges

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.