LABOUR and skills shortages are one of the greatest internal challenges for family businesses in the Midlands, ahead of cash flow, margins and financing, according to PwC.
The advisory said the focus on talent comes despite a difficult year for many family firms, with only 40 per cent experiencing any growth in demand for their products or services.
Chris Romans, partner and private business expert at PwC in the Midlands, said: “Skills shortages are currently a huge problem for all employers but for family firms, fighting the war for talent is arguably more challenging.
“Smaller businesses have fewer resources to throw at training or marketing, for instance. It’s a vicious cycle, as improving skills often requires funding that firms don’t have right now, yet without vital labour businesses will find it hard to mark progress.
“Family firms recognise the importance of talent for future growth, and this is why they rank skills shortages as their most significant challenge.”
Family firms also have the additional challenge of knowledge and skills within the family.
Mr Romans said: “In family businesses, knowledge and skills are often built up over generations and become firmly entrenched, so there’s a huge amount at stake when someone leaves. Our experience suggests succession planning is being taken increasingly seriously, but there’s still some way to go. The best succession plans are working documents that clearly define the skills required and map these continuously against potential candidates.”
PwC’s survey suggested successors might increasingly lie outside the family. Some 22% of UK firms anticipate a change of ownership within the next five years. Of these, just 36% plan to pass the business on to their descendants.
Perhaps reflecting changes on the horizon, the future direction of the business is the most likely cause of conflict among family firms. The second most likely source of tension is around the performance of family members.
Mr Romans said: “Conflict can be particularly divisive in family firms so it’s concerning that seven out of ten businesses do not have conflict resolution procedures in place. Of the firms that do have an established means of diffusing tension, third-party mediation is the most popular option. An impartial adviser can often provide the best means of settling conflict, particularly where emotions run high.”
To find out more about the PwC survey and download the report, click here
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Mr Romans said: “In family businesses, knowledge and skills are often built up over generations and become firmly entrenched, so there’s a huge amount at stake when someone leaves. Our experience suggests succession planning is being taken increasingly seriously, but there’s still some way to go. The best succession plans are working documents that clearly define the skills required and map these continuously against potential candidates.”
