Regenerative family enterprises

Australian family businesses are resilient but ready for change

Regenerative family enterprises

Family businesses are renown for thriving, even in periods of challenge and uncertainty. They have been tested by the events of the last two years and are continuing to manage the complexities of digital transformation and generational transition. Climate change and shifts in societal expectations have also posed challenges and presented opportunities.

In May 2022, the STEP Project Global Consortium and KPMG Private Enterprise released results of the survey – The Regenerative Power of Family Business: Transgenerational Entrepreneurship. The broad response across 70 countries has given us the unique opportunity to compare Australian family businesses with their global counterparts – to unlock the secrets of success. 

We take a close look at Australian family business challenges and explore global insights for leading practice solutions.

All leadership styles have their place in driving performance…what is important is the capacity and ability of the leader to change their personal leadership styles when necessary to maintain momentum in business performance and positive family engagement.

Robyn Langsford
Partner in Charge
Family Business & Private Clients
KPMG Australia

Emerging drivers of success

Entrepreneurial orientation

54 percent of Australian respondents identify as having a high level of entrepreneurial orientation, but they also demonstrate

  • relatively low levels of risk taking compared to global peers
  • significantly less pro-activity than their peers in the Americas
  • low levels of innovativeness

Entrepreneurial spirit is vital for sustained success. How does the entrepreneurial orientation of a family business adapt to changes in ownership and management? In the report, we explore risk-taking as a key factor in assessing the entrepreneurial orientation.

Leadership styles and adaptation

Here we look at the capacity of the leader to adapt their leadership style to maintain momentum and family engagement.

Australian respondents identified 'transformational leader' as the prevalent leadership style (50 percent), yet the survey results indicated a more single-minded attitude. Leaders should be conscious of not 'saying one thing and doing another'.

Globally, the transformational leadership style stands out as a preference and we explore the implications. We also suggest practical questions that all leaders of family businesses should ask themselves.

Measuring family business performance

What does success look and feel like in your family business? For most it includes moving beyond financial performance to the emotional elements that make the businesses resilient and durable.

Australian respondents reported low levels of external and internal social performance, indicating there is still some important work to be done.

We see that a focus on Environment, Social and Governance (ESG) will enhance future financial performance and family businesses need to respond accordingly.

Family engagement and commitment

What is the glue that binds a family business together? Those that cultivate a deep commitment to the business from the family itself, exhibit a high level of 'socioemotional' wealth - we unpack what this means for family business success.

Close to 75 percent of Australian survey respondents report having a medium to high level of socioemotional wealth (SEW) – the highest of all regions.

Family businesses should reinforce this competitive advantage by continually investing time and energy into the family's emotional attachment to the business.

Embrace governance and succession planning

According to our survey, only a minority of family businesses have family boards and only eight percent have formed a separate 'family council'.

Good governance can offer a diversity of views, the encouragement to think more broadly and the capacity to manage experimental risk-taking.

Family businesses that adopt at least one governance structure are more likely to exhibit higher levels of entrepreneurial orientation – the secret sauce of sustained business success and competitive advantage.

5 actionable insights for family business transformation

  1. Shifting from an autocratic to transformational leadership style
  2. Setting up governance for risk-taking to innovate and diversify
  3. Embracing a gender balanced board structure allowing for diversity of thought
  4. Sustaining socioemotional wealth by placing equal focus on family and business
  5. Measuring non-financial performance and leaning into Environmental, Social and Governance (ESG) commitments

Get in touch

We work with family businesses – helping them to solve problems, leverage opportunities and thrive from generation to generation. With our deep sector experience, we can work with you to preserve that entrepreneurial spirit, develop an adaptable leadership style, measure performance and lean into the family engagement and commitment needed for a future-ready business.

We look forward to hearing from you.

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Further insights