Choosing the right family and corporate governance structure is closely linked to how strongly the family members identify with the business and is one of the keys to long-term success for many of these firms.
In the Successful Transgenerational Entrepreneurship Practices (STEP) 2019 Global Family Business Survey (PDF 19.8MB), planned and developed through a strategic alliance with KPMG Private Enterprise, survey participants were asked about family and corporate governance structures, the number of governance tools used in their family businesses, and the relationship between the use of governance tools and the entrepreneurial orientation and performance of their firms. A full 88 percent of family business CEOs surveyed have a medium- to high-level of identification with their business.
In recent months, the family/business kinship has perhaps become even more profound as business families confront the new reality. Many are taking this time of momentous change to reflect on the purpose of their firms and a renewed vision of the roles that the business and the family can play in broader society. The importance of the non-financial priorities of a family business, or its socio-emotional wealth, are one of its key differentiators and long-term competitive advantages. It isn’t surprising then, that many family firms are reflecting on their business purpose and family roles.
A number of family CEOs who participated in the original 2019 STEP survey were interviewed again in the late-spring and early-summer of 2020, helping us to understand how COVID-19 might have affected their views on family governance. As we heard, having a good governance structure in place, along with an established contingency plan, were two key factors in helping them sustain their business and maintain leadership continuity in response to urgent family health concerns.
These in-depth interviews with family business leaders across the globe have provided us with firsthand and profound perspectives on the factors that are impacting the performance of family businesses. I encourage you to read their stories in a series of articles co-authored with the STEP Project Global Consortium to be published on the KPMG Private website in October.