No Match Found
PwC’s 2023 Family Business report ‘Transform to Build Trust’ which polled over 2,000 Irish and global family businesses across 82 countries publishes in Ireland today. It reveals double-digit sales growth of 55% for Irish family businesses in the last financial year, up from 22% in 2021. Irish family businesses report higher levels of sales growth in the last financial year compared to global peers (Ireland:84%; Global: 71%). Irish family firms also have greater growth ambitions for the next two years compared to global peers (Ireland: 82%; Global: 77%). The survey takes place every two years and this press release deals with the Irish findings.
The survey shows a resilient family business sector with a positive commercial outlook for 2023. However, the data reveals a lack of focus on areas that are are typically associated with higher levels of growth, such as:
As challenging macroeconomic headwinds impact businesses globally, Irish family businesses in 2023 are largely committed to protecting the core business, covering costs, and surviving over the next two years (Ireland: 58%; Global: 44%), rather than introducing new products and services (Ireland:37%; down from 44% in 2021); expanding into new markets (Ireland: 32%; down from 47% in 2021) or increasing investment in R&D and innovation (Ireland 26%). Just over one in five (24%) Irish family businesses say that attracting and retaining key talent is a top priority (Global: 12%)– despite the understanding that employee trust is critical to business success (Ireland: 76%; Global: 68%).
At the same time, Irish family firms are more likely than global peers to think that they are very advanced in areas such as their ability to adapt/make decisions quickly (Ireland: 68%; Global: 55%), having quality control systems in place (Ireland: 66%; Global: 48%) and that their leadership encourages a culture of accountability (Ireland: 55%; Global: 43%).
High aspirations on sustainability and ESG, but more action needed
This year’s survey reveals that the majority (64%) of Irish family businesses feel that they have an opportunity to lead the way in sustainable business practices, but they recognise that they have more to do in terms of focus and action.
Most Irish firms, like their global counterparts, admit that ESG is not an area of great focus right now. For example, only 16% of Irish family firms have a very advanced ESG strategy (Global: 15%). Just four out of ten (42%) have a person or a team responsible for ESG (Global: 43%). Less than half (47%) said that reducing their organisation’s carbon footprint is a priority in the next two years, while up from 35% two years ago when the survey last took place, it is still far ahead of global peers (20%). Very few reported that taking care of their impact on local communities is a priority.
Mind the trust gap
Fundamental to the unique challenges in the management of family businesses is trust. The research highlights that family businesses that are purpose-led generally experience higher levels of trust. The survey reports that trust levels in Irish family businesses are strong and have advanced from the last survey, with 74% of Irish family businesses stating that they have a clear sense of purpose, up from 70% in 2021 (Global 2023: 79%). Irish respondents also indicate stronger results than their global comparators. For example, 74% say that they are fully trusted by suppliers (Global: 59%); 68% say they are fully trusted by customers (Global: 51%); 84% are fully trusted by family members (Global: 74%).
However, like their global counterparts, the survey also points to Irish family businesses needing to be more proactive in building trust with certain stakeholder groups, they need to mind the trust gap. For example, 89% of Irish family businesses believe that it is essential to be trusted by customers, but only 68% report to be fully trusted by this stakeholder group; 76% believe that it is essential to be trusted by their employees, but only 57% report to be fully trusted by them. And while trust levels between family members is quite high, still around a fifth of Irish respondents admit that trust is low between certain types of family members i.e. between Next Gen family members and the current generation, between family owners and non-family management.
Irish family businesses need to take more actions to build this trust. For example, 84% do not have a clear and communicated ESG strategy (Global: 85%); 84% currently do not have a clear purpose statement and commitment that advances diversity and inclusion (Global: 79%); 63% do not have transparent communications (Global: 66%). The single key challenge to building trust with stakeholders, according to the survey, is disagreements among family members.
John Dillon, Leader, PwC Private, said: “Irish family businesses are confident about the future and have proven that they are resilient, having the ability to deal with change in a challenging landscape. To continue this trajectory, firms will need to focus on continuing to build trust across all levels and amongst all stakeholders in the business. There is also clear evidence from the survey that being advanced in having an agreed and well communicated ESG strategy correlates strongly with success and other positive attributes such as improved financial performance. Irish family businesses have a great opportunity in this area. Businesses that are advanced in ESG strategies have an opportunity to gain a competitive advantage in the face of continued disruption.”
Focus on digital capabilities in Irish family firms fall
Digital capabilities are critical to supporting governance structures and managing real-time information that feeds into decision-making processes. However, only four out of ten (39%) Irish respondents stated that they have strong digital capabilities (Global: 42%). Furthermore, less than half (42%) of Irish family firms report to focus on improving digital capabilities over the next two years and has fallen from 48% in 2021. And with cybersecurity being an ongoing business challenge, it is worrying that just 13% confirmed that they are very advanced in the area of actively protecting their private data (Global:29%).
Irish family firms likely to have more women on their Boards than global peers
The research highlights that having a more diverse Board is strongly associated with stronger financial performance. The Boards of Irish family firms (74%) are more likely to include women on their Boards than their global peers (Global: 69%). However, a third (32%) of Irish respondents have no-one from a different industry background on their Boards (Global: 26%) and over half (55%) have no one under the age of 40 on it (Global: 57%).
Irish survey respondents admit they have more to do on diversity. Just 16% of Irish family firms have a well advanced commitment to progress diversity and inclusion (Global:21%) and only a third (34%) have a person or a team responsible for diversity and inclusion (Global: 34%).
Mairead Harbron, Partner, PwC Private, concluded: “While market pressures and rising costs mean survival is a key priority for Irish family businesses, our latest data shows that those family businesses which are focused on digital transformation and diversity are reaping the rewards. Irish family businesses have more to do on digital transformation and diversity. Now more than ever, building competence and achieving strong financial performance are linked to corporate responsibility. The message is clear, for family businesses to survive, they must transform. And that transformation needs to be now.”
Link to global report:
About the survey: PwC’s 11th Global Family Business Survey is a global market survey among key decision makers in family businesses within a number of PwC’s key territories including Ireland. The goal of the survey is to get an understanding of what family businesses are thinking on the key issues of the day. The survey team conducted 2,043 interviews with family businesses, averaging 25 minutes in late 2022 and early 2023 across 82 countries including 38 interviews conducted in Ireland. The survey generally takes place every two years.
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Corporate Communications, PwC Ireland (Republic of)