More expert business advice from Paul George from the Business Families Team at PricewaterhouseCoope...
More expert business advice from Paul George from the Business Families Team at PricewaterhouseCoopers, as he reveals why he thinks taking on a non-family member in that senior positions in your family business could be the wisest move:
"I think hiring senior staff from outside the family is always a challenge for family businesses, particularly the first time they do it, it's a big step for someone senior to come into a family business and be very conscious, a bunch of unwritten rules, very unclear about how the family operate, the feasibility of the business and I think family businesses are also quite nervous about whether they can compete with public company reward scenarios like share options, because typically the don't want to complicate the equity position with share options and so on.
In fact I think family businesses, good ones, don't need to be so defensive about this, I think they're very attractive employers.
I think a lot of senior people in business have got very tired of the public company circuit, have seen through the essentially lotto ticket type approach that co driven compensation from a public company drives them to and I think a thoughtful family business that's thought through clearly how its going to relate to a senior management person can offer a very attractive package and I've seen them hire some very, very attractive people, very good people.
In terms of a family business looking outside the family for guidance I think there's an extremely valuable role even in a family business that's still family managed for a strong non exec team on the board. Families find these individuals with strong business experience who get to know the business, get to know the family just invaluable in helping them guide through some of the issues they face and that's an arrangement that works extremely well in almost every circumstance that I've seen where the right people have ended up on the board.
How easy is it for a family to reach out beyond that for advice? Well it's a big step for some of them sometimes and I think it needs to be to advisors that understand the environment. I think for a family business to be talking to advisors who don't understand what's different and special about a family business can be a very difficult process but quite a large reason to find a good one."
See more business news television shows from Paul George, as he gives his top expert business advice at http://www.yourbusinesschannel.com
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In this business tv show, Paul George from the Business Families Team at PricewaterhouseCoopers expl...
In this business tv show, Paul George from the Business Families Team at PricewaterhouseCoopers explains why it could be in your best interest to buy out the rest of the family:
“The other thing that can be a problem with a family business that thrives over many generations is if you’re not careful you end up with a very unmanageable share holder register.
You know in a modern family it’s often the case that the entrepreneur will split the shares pretty equally among his children. If they do the same then in some families within generations you’re talking about dozens of shareholders and you can end up in a very difficult and unmanageable situation where its still a private company but its got a pretty widely spread shareholder base who aren’t closely associated with what’s going on and often the company carries on operating in much the same way they did in the first generation, with a very low dividend, really running very conservatively for the benefit of the business, not the shareholders and that’s a recipe for all sorts of problems if its not sorted out.
The companies that survive longest in terms of generations, if you go back through you’ll often find there’s been a succession of single children. The two big problems in family succession are having no children and having many children and there’s a process that many of those survived have gone through every 2 or 3 generations of, if you like pruning the family tree, buying out those parts of the shareholder register that aren’t really heavily committed to the company anymore.
Borrowing in the company and doing that in that way and history says that’s a successful part of the process of keeping a family process healthy in the long term.”
See more business news television shows from Paul George, as he gives his top expert business advice at http://www.yourbusinesschannel.com
Find out more about the very latest show releases, as well as other yourBusinessChannel news by visiting our blog at ...
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More expert business advice from Paul George from the Business Families Team at PricewaterhouseCoope...
More expert business advice from Paul George from the Business Families Team at PricewaterhouseCoopers, who explains what it is that makes family businesses such strong performers:
"I think what do family businesses do well? family businesses are fantastically good at building really strong cultures. Really strong cultures that employees and stakeholders buy into big time.
Its so much easier to believe that a family that's been running a business for 3 or 4 generations and really, really believe in their product and believe in their business its so much easier to buy into that than it is maybe in a public company that is owned by a different bunch of funds this week to next week and the great public companies really, really make use of that and the families that own them in many ways often have moved away from large parts of the fulltime executive management of the company but the ones that do it well recognise them as having a unique position of being if you like ambassadors of the value of the business both internally and outside the company and that's a very powerful advantage.
Where a family manages to articulate the values of the business clearly that's powerful and it's very, very easy for all concerned to buy into that.
The other thing that's probably worth talking about is just performance and the data's difficult on relative performance but given that quite a lot of companies that are family owned are public companies, and quite a few surveys have been done on how do they actually do? How does this stuff actually work? Its difficult data and its difficult to read it clearly but they're certainly not underperforming and the majority or surveys seem to show that family ownership is actually pretty much a positive in terms of the performance of a company and there are funds out there that actually pick their investments in terms of favouring family companies because they reckon it's a criteria for performance.
Why would that be? Well essentially these companies are operating on a much longer time horizon than companies which are perhaps driven by the surplus and reporting requirements of a widely spread private company, public company rather and the family ownership gives them the luxury to actually look out on eight,10 or 20 at a time horizon and a lot of them take good advantage of that."
See more business news television shows from Paul George, as he gives his top expert business advice at http://www.yourbusinesschannel.com
Find out more about the very latest show releases, as well as other yourBusinessChannel news by visiting our blog at http://www.yourbusinesschannel.com/blog.aspx
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