PwC’s 11th Irish Family Business Survey has provided valuable insight into the importance of trust, highlighting it as the driver that sets successful family businesses apart. As we delve deeper into the survey results, one thing is clear: how trust is built is changing. Irish family businesses must not rest on their laurels, safe in the knowledge that they have a solid customer base and healthy profits. Emerging stakeholders demand an implicit guarantee that they are doing business with an organisation that is conscientious in addressing today’s issues, which are increasingly important to Irish stakeholders. These issues range from equity and inclusion to environmental, social and governance (ESG).
The survey shows 82% of Irish respondents expect their companies to grow over the next two years. However, to retain market share and protect the pipeline of future customers, our survey shows that Irish family businesses must demonstrate that building and maintaining trust is a key consideration – for customers and employees alike.
A year in review
Family businesses in Ireland have experienced increased growth compared to previous years, with 84% of respondents having had a strong financial year. This compares favourably to responses to the same question in 2021 when 67% of Irish respondents experienced growth in the previous 12-month period.
Growth ambitions demonstrate a more resilient Irish private market: 82% of participants hope to continue their growth trajectory over the next two years compared to an average global response of 77%. Many of these participants (55%) aim for double-digit growth over this two-year period. In addition, only 3% of Irish businesses foresee a sales reduction in the same period – significantly lower than the global figure of 8%.
82%
expect to grow in the coming two years; 21% expect to grow ‘quickly and aggressively.’32%
say protecting their core business is their top priority.Growth and profit are key for Irish family businesses in enabling the family to invest in their businesses’ future. Most Irish respondents (75%) believe making a profit is the best way to ensure the family business achieves its overall purpose. It is also their primary goal, as the business cannot grow without profit. Given the growth ambitions for the next two years, it is unsurprising that generating long-term value for shareholders and investors is the top priority for Irish family businesses.
Transform to build trust
Unsurprisingly, Irish family businesses believe it is essential to have the trust of customers, family members, employees and suppliers. Leveraging the ‘trust premium’ they have worked hard to obtain is central to continued success.
*Q: How Important is it that your company is trusted by these stakeholder groups?
(Showing 'essential' and 'very important'.)
**Q: Which of these statements do you believe best describes the level of trust the following stakeholder groups have in your company? (Showing 'fully trusted.')
Source: PwC's 2023 Family Business Survey/ PwC analysis
The survey results show that Irish family businesses are passionately customer-centric, with 68% of respondents stating they are fully trusted by their customer base. This is well above the global average of 51%.
Trust between family members is generally high: 84% of Irish respondents believe they are fully trusted by family members, which is higher than the global average.
It is worth noting, however, that about one in five Irish respondents admit to lower levels of trust between family members, with a quarter of Irish family businesses stating that disagreements among family members represent one of the biggest challenges to building trust with stakeholder groups.
That said, 42% of respondents do not encounter major challenges in building trust with stakeholders, compared to 37% globally.
Communication between family members is relatively high, while 54% of Irish respondents say there is family alignment on company direction – slightly lower than the global figure of 59%. Meanwhile, 70% of Irish respondents state that family members regularly communicate with one another about the business and its performance. Almost the same percentage believed that relevant information is shared in a transparent and timely manner between family members.
Improving trust levels with other key stakeholders, such as employees, is an area of focus and requires improvement. Only 57% of Irish respondents believe that they are fully trusted by their employees.
The stakeholder group for family businesses has expanded, and the employee takes a central place within this impact tier. A high percentage (84% in Ireland and 81% globally) of respondents confirmed that they have a governance policy in place – from shareholder agreements, wills and dividend policies to family constitutions, entry and exit provisions and conflict resolution mechanisms. Irish family businesses must protect their legacy by implementing good corporate governance frameworks and ensuring that these are seen as live processes.
Trust is built from the inside out; a company won’t be trusted by its customers if its employees do not trust it. Irish family businesses understand the importance of employee trust, with 76% stating that it is essential to be trusted by employees. Almost one in four cite attracting and retaining top talent as their most important priority.
As the labour market remains remarkably tight in Ireland, leading to a particularly challenging and competitive market for employers, it is now more important than ever to focus on building employee trust. To gain the trust of employees, employers must demonstrate the following:
- a clear purpose and values;
- a commitment to ESG; and
- accountability, along with two-way communication.
As with their contemporaries worldwide, most Irish family businesses admit that ESG issues are not currently an area of focus. However, this demands prioritisation to help build trust and buy-in from employees.
Adaptability and agility
Irish family businesses’ key long-term goals include protecting the business and ensuring it stays in the family.
To ensure a worthwhile legacy to protect – and indeed, nurture – in years to come, businesses must ensure that the groundworks are in place now.
Purpose
74% of Irish family businesses claim to have a clear company purpose and for the most part, Irish respondents set goals and targets for growth and customer satisfaction. A business that can demonstrate a clear purpose and mission is more likely to win the trust of its stakeholder group.
Most Irish family businesses are positive about clarity of roles and embrace change rather than resist it. 84% of respondents are satisfied that there are clear roles and responsibilities for those tasked with running the business. Meanwhile, 74% of family businesses indicate that they have access to reliable and timely information that contributes to the overall decision-making process.
But worryingly, only a minority of Irish family businesses have taken the time to set goals and targets that encompass key metrics such as diversity and inclusion or social impact. Action must be taken in the short-term by most Irish businesses to ensure that they are responsive to societal needs and the demands of today’s consumers, as it is clear that ESG and a holistic diversity agenda are becoming more and more pressing.
Adapting to change
In the main, Irish family businesses are trending ahead of global results when it comes to their ability to adapt to change. Irish boards are more likely to include women than the global average. However, it is worth noting that 26% of Irish boards have no female representation (compared to 31% on a global scale).
Furthermore, only 39% of Irish respondents feel they have strong digital capabilities. However. this is not a uniquely Irish problem with the global response trending slightly higher at 42%. Irish family businesses must help their staff become comfortable with technology and harness its potential.
To maintain employee trust, employers should dispel any undue fears of workplace replacement by technology. This can be achieved by actively creating opportunities for employees to build skills.
In our recent Workplace Hopes and Fears Survey 2022, 52% of Irish employees sought a combination of remote and in-person working. Irish family businesses must be flexible and meet employees’ needs in terms of hybrid and remote working. This will require investment in digital capabilities to support employees working remotely.
The key actions to take now
Building trust is of utmost importance to family businesses. You can do so by taking the following actions:
1. Protect and maintain the trust of employees
Meaningful engagement with employees is critical to the survival of any business. Ensure that business owners and their employees have a solid foundation of trust. Irish family businesses face an extremely competitive employment landscape. The challenge of attracting and retaining talent increases as the empowered employee becomes more incentivised to test the market (as highlighted in PwC’s Irish Workforce Hopes and Fears Survey 2022).
2. Improve your digital capabilities
A fit-for-service platform is essential to appropriately engage your target audience, both internal and external. It also creates a level playing field for Irish family businesses to compete with other businesses. Having the right digital capabilities remains problematic for Irish family businesses. Without meaningful improvements, some businesses will find themselves left behind.
3. Engage in social responsibility-driven activities
Social responsibility, equity and diversity are becoming increasingly valued by employees and consumers. Irish family businesses should push ESG up their list of priorities and demonstrate their commitment to ESG to retain the trust of employees and consumers.
4. Build trust through transparency
Irish family businesses should depart from the traditional approach of shielding parts of their business operations from the public domain. To build and retain trust, there is an increasing appetite for organisations to ‘show and tell’ by consistently communicating key messages to all stakeholder groups.
5. Strengthen the family as a cohesive unit
Irish businesses have identified strong levels of trust within the family. However, one in five outlines some form of fragmentation with certain family members. Therefore, family businesses must ensure that a robust and active governance policy is in place. Its existence is often critical to the survival of the business within the family. Ensuring family conflict is managed through a robust governance policy can protect a ‘spillover effect’, which can damage trust across the wider business.
We are here to help you
Irish family businesses have ambitious growth expectations for the next two years. To fuel those ambitions, they must have the winning formula: the much-needed trust of their key stakeholders. These include customers, employees, family members and the general public. To achieve this, Irish family businesses must be responsive and understand that their stakeholder groups have varying definitions of what it takes to build trust. The key to success for Irish family businesses is to be diligent and vocal about their efforts. We are ready to help you as you face the future. Contact us today.
PwC's Global Family Business Survey 2023:
Transform to build trust
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