How family businesses can show resilience during a pandemic
A recent survey by BanyanGlobal found that close to 90% of family businesses had seen a negative impact on business due to the Covid-19 pandemic and about half of those said the impact has been significant.
However, as we slowly enter the recovery phase, this is where resilience comes into play. For multigenerational-businesses, this period can represent a reset, a time to retrench and revisit the brand identity, purpose, and key offerings. It’s a rare opportunity that every business should utilise.
Family businesses are driven by the strong relationships between the family and long-time staff, as well as the service they provide to their customers and communities. During this reset, families must recognise that these close relationships are a valuable part of their brand.
Still, future success for such family-owned enterprises is by no means a given. In addition to reacting to rapidly changing market expectations, families must also continue to evaluate how the business is meeting their needs and how they themselves might adapt to meet the needs of the business.
According to Kellogg Insight, family management may also find it is time to cede more control to non-family leaders. Family leaders have an inherent tie to legacy operations and business practices that have served them well through history. However, the current moment could call for talent with exposure to different industries and practices (ceding more control to younger, next-generation family members with new perspectives and skillsets, either in operating or board roles, could also be useful).
“Families need to ensure that their decision-making practices and structures function effectively in times of uncertainty and change. This may require a new form of governance, perhaps in the form of an active board of directors with skilled and involved independent board members” says Jennfer Pendergast, John L. Ward clinical professor of family enterprise, and executive.
Most business sectors have benefited from a strong economy in recent years, which is why many owners have gotten used to their routines that include increasing dividend flow, even if their management teams suggest otherwise, advising that owners should not rely on dividends.
When times are tough, and in situations like the one we are in now, owners may need to be the first ones to sacrifice benefits and take a pay cut.
Family businesses have struggled with the challenge of how to compensate managers and employees, especially when they are working long hours and putting themselves at physical risk of exposure to COVID-19.
With profits down, many boards are advocating that discretionary bonuses should be paid to employees, reallocating capital from the owners to the business. .
Purpose and values
For family businesses, values are the connective tissue. A business’ purpose and values are usually the source of success, commitment, and longevity.
However, when focusing on survival and preparation in challenging times, cultivating or maintaining values may not feel like a priority. It is crucial and especially now. Embracing values is vital to sustaining confidence and trust in your business through the crisis and beyond.
How can you do this?
- Stay connected and prioritise communication by facilitating regular virtual gatherings with your family, stakeholders, and employees.
- Utilise the consistently bustling platforms of social media to communicate your values clearly, staying connected with ecosystems, communities, and most importantly, customers.
- Create transparency, consensus, and support to address crises by holding family council and shareholder meetings.
- Lastly, align any actions you take moving forward with your company’s purpose and values by supporting wider communities and charitable causes.