A new report has highlighted eight key success factors for family businesses’ digitization and sustainability strategies. Nearly half of family businesses believe these are critical fronts that will determine their future success.
The study was completed by the Big Four consulting firm KPMG, in collaboration with the STEP Projects Global Consortium. Data collected by researchers from 2,439 family businesses across 70 countries and territories reveals how family businesses are great sustainability ambassadors, demonstrating how best practices can be applied. create shared value, gain competitive advantage and achieve long-term growth.
Some companies, especially smaller businesses, remain concerned about the short-term economic viability and costs of sustainability. However, with encouragement from various stakeholders, many are starting to take the first steps on their sustainability journey. Finally, according to the study, 43% of respondents reported a high degree of sustainability and digitalisation.
Tom McGinness, Global Leader, Family Business, KPMG Private Enterprise, commented: “I truly believe that family businesses successfully interact with all stakeholders on the journey to sustainability. This stability will not only survive but also prosper. Those who don’t step up are likely to be left behind and the choice for companies could be that binary. Family businesses have thrived on core sustainability principles for generations, and there are many lessons people can learn from their experiences.”
For home businesses still unsure of how to start their own sustainability journey, the KPMG report also highlights some key requirements to help businesses achieve sustainability performance. improved. The eight-point plan aims to create a blueprint to guide responsible and sustainable business practices, many of which can be applied across the industry.
Distributed family ownership
Family involvement in a business can see traditionally familial figures reluctant to relinquish any control over their organization. The majority of 99% of respondents reflect this, admitting that their CEO has multiple roles in their family business. But this can stifle change – especially when it comes to issues where the younger generation is more deeply invested, such as climate change.
Active non-family member
Next, companies with high concentration of family ownership also rank low on KPMG’s digital and sustainability index. However, the magnitude is higher when families own less than 25% of the shares, allowing non-family members to challenge the status quo in a family company.
Highly structured governance practices
To help balance the company’s management structure, ensuring that there is not just one voice that governs the company – and allows the involvement of non-family members – the governance structure is important. According to KPMG, companies run by a board of directors or a family board – rather than just single actors – can make better progress in defining sustainability goals and implementing them. plans to achieve them.
Charismatic or transformative leadership style
However, this does not mean that business leaders simply have to ‘get out of the way’ when it comes to sustainability. Leaders have an important role to play in securing support from the wider company – leadership from above to influence the underlying values and beliefs of employees and management. KPMG notes that charismatic leaders who are persuasive can highlight a sense of shared identity and help the broader company understand the significance of the challenges ahead.
Gender diversity on the forum
KPMG also found that diversity is a significant contributor to sustainable performance – especially in relation to the number of female board members. According to the company, previous research has shown that female directors have more diverse backgrounds and education levels, which could add ‘new thinking’ to the board – helping to foster discussions on sustainability. Likewise, many of the best performing family businesses are increasingly adopting new recruitment methods that focus on minorities, people with disabilities, and to achieve greater gender parity in jobs. senior management role.
Towards the front
Perhaps most clearly, for an issue that is primarily about offsetting the negative consequences of climate over the next 50 years, a forward-looking approach to business is crucial. As a result, companies with a long-term perspective tend to have a greater sense of urgency when it comes to addressing sustainability issues today – aware that inaction could jeopardize things like supply chains. or their international investment.
Strong business mindset
This forward-looking attitude will also mark opportunities for companies to take advantage, both in the short and long term. The entrepreneurial mindset helps home businesses recognize those opportunities and how they can make the most of them – making sustainability goals more appealing to them in the process.
Ultimately, home businesses need to understand that sustainability and digitalization are interconnected. Digital technologies can help support sustainability policies, monitor energy use and resource waste, and help identify areas where efficiency can be increased and costs cut. fee. Home businesses that deploy digital technology in this way are often faster and more agile than their competitors, with the ability to respond to change more quickly and, as a result, respond well over business and sustainability goals.