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The changing face of family business

Scott McCulloch is editor of Families in Business.

Women looking for a fast track to a seat on the board should join the family business, according to new research by Coutts. More than 60% of British family businesses have female directors. The proportion of non-family businesses is considerably lower at 42%. Coutts says not enough has been written about the unique contributions of women in UK family businesses, noting that research in the US suggests women-owned family businesses are on the rise. That, and a few other things about the UK's family business sector, could be about to change.

Mark Evans, head of family business affairs at Coutts, is quick to emphasise the bigger picture. Rightly so. He reminds us that there are some commentators who still believe women are brought into family businesses solely for reasons of share ownership and tax: "The time has come to explore the invisible role that wives and daughters have been performing for a long time." Anyone inside or outside a family business should be able to apply for the leadership position, the survey says. The fact that 12% of family businesses have female CEOs and 21% include female non-executive directors suggests that women are starting to change the way family businesses are managed. This should be applauded. Commenting on the findings, Sarah Grunewald of Directorbank perhaps puts it best: "There seems to be clear evidence that the requirement within family members across gender and generation, and the need to minimise the risk of controversy because of the possible impact on family relationships, seems to give family businesses a discipline and a set of coping skills that their non-family competitors lack. For example, the inclusion of females on the board, even if only as non-executive directors."

The survey, which questioned 293 family and non-family businesses with turnover of more than £1 million, also ­underlines the problems families have. The biggest source of conflict is the "inability to remove underperforming family members" from their position within the company. The reality, the report states, is that in a family business conflict is inevitable. Poor communication, the problems of planning for succession, sibling rivalry and trouble from in-laws are all cited as major sources of conflict. Nothing new there, as any family business consultant would tell you. But, as John Freeman of the Association of Family Business Advisers points out, family ­businesses appear to be more aware of the potential conflict and issues that could affect the business than non-family ­business owners.
 
Freeman is one of two dozen heavyweight contributors to this new report which, sensibly, eschews focusing on past performance. Coutts announced this study as the first in a series of surveys. In its next report the bank will explore what companies are doing to capture future opportunities. This initial survey, however, is a fascinating piece of research, for two reasons. First, it is forward looking, comparing key business practices ranging from structure to appetite for risk. Second, the report's commentators do not shy away from telling it as it is. Generational transition – from a sibling partnership to a cousin consortium – will present an enormous challenge say Peter Leach and Juliette Johnson of BDO Centre for Family Business. They qualify: "It does not mean they are actually going to face it and address it." Let's hope this latest survey and others will push families into positive action.

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