As KPMG’s Global Leader for Family Business, Robyn Langsford has more than 25 years’ experience working closely with private clients to deliver strategic financial and tax advice tailored to their business and the challenges they face.
A trusted adviser to family businesses and family offices, she has a broad skill base and diverse experience that enables her to solve multidisciplinary problems and add value.
Robyn has assisted many family and private groups working through a number of issues including asset protection, succession planning, tax effective structuring and meeting their philanthropic objectives… “Some of the most successful businesses in the world were started by families,” she says. “Family businesses represent about two thirds of the overall Australian business community.”
In an interview with Campden FB, she talks about putting the spotlight on leading female entrepreneurs, broaching the succession question and educating Next Gens…
Tell us about your role as KPMG’s lead for family business and private clients in Australia…
I have always particularly enjoyed working with family businesses and have done so for more than 25 years. The level of drive, dedication and commitment to the values and vision of the family is very compelling and engaging – when family businesses ‘hum’, they have a resilience and strength that differentiate them in the market place.
Family businesses make up nearly 70 per cent of all Australian organisations, what’s the reason for this huge percentage?
My view is that family businesses are often under-recognised by governments and key economic stakeholders. Many of the world’s most successful businesses today were started by families.
From an Australian perspective, family businesses represent about two thirds of overall Australian businesses and employ more than half the population, they are therefore a segment of the economy that is vitally important and, in my view, deserve greater recognition as a vital segment of the economy.
KPMG Private Enterprise and Women in Family Business have put a spotlight on leading female entrepreneurs who are driving the success of family enterprises. What was the reason for this focus and who can we expect to feature in the series?
At a high level, diversity and inclusion in family businesses, as well as in any workplace, contribute to a positive company image, improved retention of employees, improved business outcomes, productivity and bottom line. Diversity of views strengthens organisational culture and engenders resilience and adaptability.
These were then, in part, some of the key reasons KPMG chose to focus on Women in Family Business. Giving greater impetus to the importance of female family members in the family business context and the incredible benefits they can bring to their family’s business, particularly in leadership roles, will deliver benefits not just at the bottom line but also culturally. Family businesses overlooking women for management and leadership roles is a missed opportunity. It represents a major opportunity cost when 50% of the labour force are left untapped and denies the benefits outlined above of a more inclusive and diverse labour force.
“Transparent communication among family members is crucial.”
Campden Wealth’s 2022 Global Family Office Report found that discomfort discussing sensitive matters, highlighted by 15% of respondents, would naturally lead to an inability to engage with family principals on the subject of succession planning. What advice would you give to family members who want to broach the succession question?
A) Start early!: Succession planning should begin well in advance, preferably years before the anticipated transition. This allows time for considered discussion and careful implementation of a plan.
B) Communicate openly: Transparent communication among family members is crucial, about topics such as the future of the business, who will hold what roles, responsibilities, and managing the expectations of family members involved in the succession process. Good communication promotes constructive socio-emotional wealth and can help avoid misunderstandings and conflicts down the road.
C) Identify and develop potential successors: Identify potential successors early on and provide them with the necessary training and development opportunities to prepare them for leadership roles. This may include formal education, on-the-job training, and mentoring from current leaders.
D) Engage professionals: Succession planning can involve complex financial and legal considerations, such as estate planning, tax implications, and business valuations. Therefore, seek the assistance of qualified professionals to ensure a smooth transition and to avoid potential legal and financial challenges.
The same report found that while family offices and family businesses can be a useful training ground for Next Gens’ educational development, 64% of European families expect them to gain work experience elsewhere, such as at a bank or hedge fund, before joining the family firm. Would you agree this is the right tactic for preparing Next Gens to join the family business?
My view is that there is no one-size-fits-all answer to this question, as it depends on various factors such as the nature of the family business, the skills and interests of the next generation and the specific goals and aspirations of the family and the business.
Some benefits to gaining work experience elsewhere are:
1) It gives the Next Gen a broader perspective by allowing them to gain exposure to different industries, work cultures and business practices. It can also help them develop a greater understanding of the business world and the challenges and opportunities it presents.
2) Gaining work experience in other organisations can provide the next generation with the opportunity to develop new skills and expertise that may be valuable in the family business.
3) Working outside the family business can help the next generation establish an identity separate from the family business. This can be valuable in building their confidence, decision-making abilities, and leadership skills.
It's important to note that there may also be valid reasons for the next generation to join the family business directly, depending on the circumstances. Ultimately, the decision of whether the next generation should gain work experience elsewhere before joining the family business should be made on a case-by-case basis, taking into consideration the specific dynamics of the family business, the aspirations and skills of the individual in question and the long-term vision and goals of the family and the business.
Preparing the next generation for their post-succession role is an important part of family offices’ responsibilities, and they do this through a variety of activities. Most offices believe they are well-prepared to support the Next Gens’ investment objectives (95%) and help them find bankers, lawyers and other service providers (81%). But when it comes to more important functions, such as helping Next Gens understand their post-succession roles or interfacing with trustees, a much lower percentage (73% and 76% respectively) believe themselves prepared. How can these educational issues be addressed?
• Active mentoring from the current leaders in the family business. Working closely with senior leaders of a family business who are willing to share knowledge and communicate openly can deliver invaluable insights and expertise.
• Professional development at relevant conferences and workshops. Not only does this improve their skill base but also assists them to form networks with individuals form similar backgrounds and life situations.
• Encouraging Next Gens to work across the business in different roles and in different areas. This will give them a more holistic view of the businesses and its challenges and opportunities
• Formal business education at a Bachelor or Master’s level can give next gens a robust understanding of business fundamentals.