The uncertainty created by the Covid-19 pandemic has made current generation family business owners less likely to relinquish control, and has made it more difficult for the next generation to establish themselves, according to a PwC report.
PwC’s 2022 Global NextGen Survey spoke with more than 1,000 next generation members in family businesses across 68 countries, including Ireland, to understand their key priorities and challenges.
It established that more than half of them believe communication between family members about the business increased during the pandemic, but also that there were other more negative consequences to the pandemic.
The uncertainty created by Covid-19 appears to have made the current generation less likely to relinquish control and more difficult for the next generation to establish itself, according to the report.
Just 28 per cent of the next generation members said they were given significant internal operations to run, compared with 48 per cent in PwC’s 2019 report. About 32 per cent said they are used as a sounding board, down from 36 per cent in 2019.
Furthermore, 45 per cent said they find it difficult to prove themselves as a new leader or board member. Some 57 per cent complained of a reluctance on the part of some of the current generation to provide seats at the table.
Succession plan
Almost four out of 10 said there was resistance within the business to embrace change. While 61 per cent said the family has a succession plan, less than four out of 10 next generation members said they were involved in its development.
The report also shows that far fewer female next generation members (43 per cent) are in leadership roles than their male counterparts (59 per cent).
In addition, 35 per cent of women believe their male counterparts are more likely to be expected to run the business. Fewer women (66 per cent) have a clear idea about their personal ambitions for a future role in the family business compared with men (79 per cent).
Moreover, for the top-ranked priority area of achieving business growth, just half of women (53 per cent) said they were actively engaged, compared with 69 per cent of men.
The report found both the current and next generations are focused on growth. However, for the next generation of family business leaders, growth and sustainability ambitions go hand in hand.
Two-thirds of next generation family business members said achieving business growth was a top priority. At the same time, nearly the same number (64 per cent) said their family business has the opportunity to lead the way in sustainable business practices.
More than seven out of 10 next generation members said their business has a responsibility to fight climate change and its related consequences, but nearly half (45 per cent) do not believe their family business puts sustainability at the heart of the business.
Sustainability
Just 28 per cent of the next generation said they were currently engaged in increasing the focus on sustainability and impact, but 72 per cent said they expect to be involved in it in the future.
Similarly, just a quarter of the next generation said they were presently engaged in reducing their business’s environmental impact, whereas 65 per cent expect to be in the future.
Other areas where the next generation said they were actively engaged at present include achieving business growth (59 per cent), ensuring the business is offering the right products and services (50 per cent) and adopting new technologies (44 per cent).
