Governance rises in importance, again, for family businesses

in Industry Insights, 11.01.2018

The latest Family Business Barometer was recently released by the European Family Business (EFB) and KPMG Enterprise, containing the results of an online survey: over 1,100 family businesses across 26 European countries responded on a number of issues. The top trend involved governance.

The Barometer shows that finding the balance between family interests and business interests remains a key concern, with 87% of respondents calling this issue “important” or “very important.” Governance has consistently grown in significance since 2014, when only 59% felt it was important.

Sensitive but crucial

  • 22% of family businesses in Europe aim to pass management on to the next generation. But is the next generation ready for that, and willing? Do they have the appropriate skills, or know how to handle family conflicts?
  • 84% of respondents indicated that preparing and training a successor was “important” or “very important” to their business, and 10% are ready to appoint a non-family CEO.
  • 77% of the respondents agreed that non-family executives bring expertise and benefits to the family business.
  • 43% of respondents see the war for talent as a main challenge.

“Business families need to invest time understanding the wants and needs of the next generation. It’s a powerful conversation that gets them thinking about governance, succession, and what it takes to ensure their financial well-being,” commented Vangelis Apostolakis, Deputy Senior Partner, KPMG Greece.

Real life has made it clear that sitting down and making decisions about the future is, for most family businesses, not as simple as it sounds. Each family member has a vision and an agenda—at least one of each. We encourage every family business owner to pursue mechanisms that could help ensure business continuity as well as those that prevent conflict. Such mechanisms could be a shareholder agreement, a family charter, a family council, a policy for the selection and remuneration of family employees, and even a succession plan for the CEO and the executive positions.

Family businesses are world leaders, seeking to build—or enlarge—legacies that will endure for generations. To maintain this passion and to remain competitive, a review of governance structures might be recommendable. For more information, please contact me or visit our website.


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