When it comes to a family business’ long-term sustainability – diversity is important, according to KPMG's 2021 Australian Family Business Survey.
The complexity of the family business system places a great strain on the leaders of those businesses. It requires an understanding of a whole range of issues and concerns, where what’s right for the business needs to be continually balanced against what’s right for the family.
This is where the benefit of diversity at the leadership level and across the business plays a key role in helping to sustain long-term success.
Diversity, which seeks to be inclusive, captures the intrinsic characteristics of differing gender, generational and cultural beliefs.
Diversity in family business can offer a greater pool of talent for leadership roles and improve decision-making quality due to the different perspectives offered.
Diversity, and the different perspectives it offers, is important to acknowledge and harness in the process of leadership transition. Being open to the ideas of family members that are in position to take over leadership at the early stages of the process is vital to enabling a smooth transition. Being willing to listen to the advice of others that have gone through their own process of transition is infinitely valuable as many who have appointed independent directors to their board would attest.
However, realising the benefits of diversity requires more than simply having someone different to you on the board – it means actively seeking out their views and opinions. Having an independent Board of Directors is a good thing but if all that happens is ‘passive’ agreement with “whatever they said”, then the benefit of bringing together people with different experience, backgrounds and beliefs can be lost.
Through discussions with other family businesses we uncovered a number of ways you can ensure diverse views are properly heard and encouraged.
Many created forums designed to allow people to share perspectives such as family councils, family advisory boards and next generation sub-committees. Several were also taking active steps to ensure that the blockages to participation were removed by, for example, introducing flexible work arrangements for young parents and other care givers. Others were purposefully bringing in new skills and expertise, either through recruitment or education, where the family had identified those skills would be needed at some point in the future.
Diversity of thought and opinion is critical to building a sustainable business. A family business would be leaving ‘money on the table’ if it chose to ignore the experience and skills of the family as a whole, not just those who may be most eligible by virtue of age or gender.
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How Australian family businesses navigated the past 2 years and the challenges they face.