71% of family businesses reported growth in their latest financial year, with 43% reporting double-digit growth and 77% reporting that they expect to grow in the coming two years
Family businesses with a communicated ESG strategy are more trusted by customers, yet 67% of family businesses put little/no focus on ESG
Two thirds of family businesses say employee trust is essential – yet only 36% say they are focused on attracting and retaining talent
Family businesses with a company purpose connected to the United Nations’ Sustainable Development Goals (SDGs) are performing better than their peers across multiple financial and social metrics, according to PwC’s 11th Global Family Business Survey.
The report, Transform to Build Trust, which polled over 2,000 family businesses across 82 countries between October 2022 and January 2023, reveals double-digit sales growth at 43% of family businesses globally in the last financial year, up from 21% in 2021.
Notably, nearly three-quarters (73%) of family businesses that experienced double-digit growth over the last financial year are those with a clear set of family values and an agreed purpose for the business. This year’s survey reveals an upward trend in the share of family businesses willing to lead the way in sustainable business practices.
High performing family businesses in 2023 are shown to have:
Employee incentives (53%)
Boards committed to diversity (52%)
Strong digital capabilities (47%)
As challenging macroeconomic headwinds impact businesses globally, family businesses in 2023 are largely committed to protecting the core business, covering costs, and surviving, increasing significantly as a key priority in 2023 rather than pursuing digital capabilities and introducing new products and services. There is clear evidence that being very advanced in having an agreed and communicated ESG strategy correlates strongly with success and other positive attributes.
Building trust through commitment to purpose
Fundamental to the unique challenges in the management of family businesses, those that are purpose-led generally experience higher levels of trust (59%) between family members. According to Edelman’s 2023 Trust Barometer, customers now more than ever expect action from business on social issues, and this is reflected in the growing number of family firms who achieved double-digit growth (52%) in the past year, as found in PwC’s survey. Furthermore, more businesses (10%) that are working hard to build trust within their companies experienced a higher level of growth in the same period. However, only a minority of family businesses are taking routine action to ensure purpose is being tracked effectively, with 46% respondents publishing it online and 36% actively communicating it to family members.
Notably, despite the correlation between delivering on ESG (62%), diversity and trust with customers, only 22% of family businesses globally are currently focussed on it. With nearly all respondents considering customers their most essential stakeholder group (95%), and more businesses that are advanced on DEI (10%) and ESG strategies (8%) experiencing double-digit growth, there is an opportunity for family businesses to gain a competitive advantage in the face of radical disruption and a changing economic landscape.
Digital capabilities for better corporate governance and customer relations
Critical to supporting governance structures and managing real-time information that feeds into decision-making processes, nearly 10% more family businesses that have strong digital capabilities experienced double-digit growth in the past year. Also facilitating processes to gather customer and employee feedback, family firms fully trusted by these stakeholders tend to be more digitally advanced. However, only two-in-five (42%) feel they have strong digital capabilities and the share of firms focussed on improving in this area as a key priority has fallen as a top priority for family businesses since 2021, with 52% ranking digital capabilities as a top five priority for the next two years.
Board diversity is key for transformation
Legacy and succession planning are top-of-mind for family businesses in 2023, with younger and external voices often cited as advocates for change and progression. For example, those adopting digital transformation tend to have more diverse boards (49%). In this year’s report, having more than two non-family board members was strongly associated with double-digit growth. These firms also tend to be more advanced in areas such as contributing solutions to society, the environment, and diversity, equity & inclusion, focus areas that were also linked to stronger financial performance. Yet one-third of all respondents only have family members on the board, a quarter have no-one from a different industry background, and only 9% are considered diverse. Family businesses with board diversity have a slight advantage of those that do not in terms of reported double-digit growth this year (46% and 43%, respectively). However, one-third of family businesses have family members on the board, a quarter have no-one from a different industry background on the board, and only 9% are considered diverse.