ORGANIZATIONS HAVE UNIQUENESS, RESILIENCE TO FACE CHALLENGES
Family businesses are America’s economic engine, accounting for 64 percent of U.S. gross domestic product. Yet, whether they are a Fortune 500 company or a mom-and- pop shop, experts have found that most family businesses share some distinct qualities that make them truly unique and resilient.
In fact, a recent report from the STEP Project Global Consortium and KPMG Private Enterprise shows how the unique structure of family businesses has em- powered them to respond to the impact of COVID-19. The study found that the involve- ment of the family and their long-term mindset has enabled them to demonstrate resilience in the pandemic, placing them in a key role to lead the economic recovery.
The report, Mastering a comeback: How family businesses are triumphing over COVID-19, includes insights from nearly 2,500 family businesses and more than 500 non-family businesses. It uncovers three core strategies used by family businesses to address the immediate impact of COVID-19:
- Exercising patience: Family busi- nesses are focused on protecting their succession plans and long-term future for the next generation. This long-term mindset has enabled them to leverage their patient capital to understand the full impact of COVID-19 on their busi- ness and others in their industry, with a view to adopting plans for the long term, rather than just mitigating the short-term impact of the pandemic.
- Social responsibility: They took steps to address the impact of the pandemic not only on their family and business, but also on the welfare of society, and the needs of all their stakeholders including employees, customers, suppliers and local communities.
- Business transformation: Family businesses were found to be 42 percent more likely to implement business transformation strategies than non-family businesses during the pandemic. Family businesses with multiple generations in the firm were 45 percent more likely to implement a business transformation strategy than single-generation family firms.
According to STEP Project Global Consortium Global Academic Director Andrea Calabrò,“One of the key differentia- tors of family businesses is how they define success. While profits and dividends are important financial measures, success in family businesses is also defined by both financial and non-financial objectives, such as control, transgenerational succession, social capital, emotional connection to the firm, and reputation.”
Calabrò continued, “It also explains why, after taking immediate actions to cushion the financial shock of COVID-19, families turned their attention to longer-term strategies for sustaining the purpose and non-economic value that the family derives from owning and managing the business.”
In this issue of the MBA Business Magazine, we’ll highlight many of the family businesses that are celebrating decades of success, including Warren, Pennsylvania Betts Industries, Inc. The 120-year-old, sixth generation family owned business is an industry leader in the manufacturing of critical components and lighting systems for the tank truck industry. We’ll also hear from 2021-2022 Manufacturer & Business Association Board Chairman Steve Jones on his insights on family businesses, specifically his own Ron Jones Hardwood Sales Inc.
We know family businesses take great pride in their operations and their teams, many investing in ongoing professional development, and it’s an area in which the Manufacturer & Business Association (MBA) can help. To learn more about upcoming courses, check out this month’s Training Catalog or visit www.mbausa.org.