The spouse of a family business leader could be the answer to smooth succession in Australian family businesses, according to research.
The study, by the Australian Research Council, financial advisers Pitcher Partners and Melbourne-based Swinburne University, found many family businesses leaders were wary of involving their spouses in succession planning.
Yet Richard Shrapnel, executive director of Pitcher Partners, told CampdenFB that a spouse “brings a better balance to the discussion where not only businesses imperatives are being considered but also family imperatives".
Australian family businesses have a collective market value of Aus$3.5 trillion, but 75% have no succession plan, according to the three-year research project, which was conducted through in-depth interviews with 70 family firms from Australia's top 500 private companies. The preliminary findings were published in January.
Fewer than 5% of the family firms surveyed were headed by a woman – this figure included companies that were managed jointly with a male partner. But, the researchers pointed out even if a spouse was not directly involved in the daily running of the business, they often held a stake – usually for tax and planning purposes. So, at some point, the business leader would need to gain their consent to the succession plan.
Shrapnel said: "We have found that where this is done early a better outcome is achieved, rather than assuming that the spouse will simply accept and sign the plan."
But, the research found a general reluctance among family businesses leaders to address succession planning, followed by uncertainty about how to include the spouse in the discussion once the issue had been raised.
According to the study, this inadvertent exclusion of the spouse deprives the process of a useful feminine influence. It found husbands were keen to establish a legacy, wanting to see the business remain in the family, while wives were more concerned about the wellbeing of family members.
Shrapnel said: "The spouses tend to look at the question of succession in a more holistic sense and consider what will be the impact on the family, on the unity of the family and on individual members. This generally provides for a more successful outcome in the longer term."
He added: "While we have not seen any succession processes where the male business leader has surrendered their role as a leader to their spouse in developing a succession plan, we have seen instances – not uncommon – where the spouse has spoken strongly during the succession process and has had a material influence on the outcome."
Many Australian family businesses are reaching a pivotal point in their lifecycle, according to the researchers. Firms founded by the "baby boom" generation – those with leaders aged between 56 and 75 – should start to think about succession, they said.
According the study: "Effective succession planning will become the most important skill that business owners will need to develop to capture opportunities and to avoid the risks."