Legacy, purpose and values

"Legacy is a story that needs to be retold over and over again without forgetting to always add another chapter."

Sian Steele, PwC Global Family Office Leader

Family business owners have a rich history which they can use as a template for their future narrative. Personal to the family, legacy is as much about the ability to reinvent themselves, as to endure the test of time. It determines what they will become and our UK participants agreed protecting the business is essential.

How legacy plays out though is changing. Whilst protecting the family business is a priority, what families want from it is evolving. Providing employment for family members is something only 14% of family businesses are now focused on. Whilst they may not consider the business as an employment vehicle for the whole family, many are still looking to their next generation to secure their legacy with over half planning to pass the business onto them. The figure grows to 71% of those who already have the next generation working in the business.

Hastings Hotels have always set out to grow their prestigious hotels group in Northern Ireland, supporting local suppliers and the tourism industry. The latest chapter of their legacy is their recent transformation of the iconic Grand Central hotel in central Belfast. This is not only a prestigious addition to their collection, but is also helping grow the region’s profile overseas and attract international spend. Personal to the Hastings family, their legacy is having a positive impact on their region daily and is a source of pride to many in Northern Ireland.

Establish your purpose

One often quoted advantage of family businesses is their long term view. Answering to their own conscience they make decisions based on why the business exists - their purpose. It determines what they want to achieve and their values show them how to behave to get there. Our research has shown there are significant benefits for family businesses with a coherent purpose who document their values and put them to work across the whole business, especially for those growing quickly.

As part of the succession process at Hobbs House Bakery, Trevor Herbert was keen to pass down the family ethos to the next generation. However, it was clear that this would need to be in a language they could understand. The process of updating their purpose has helped his successor, George Herbert, set the vision for the future of Hobbs House Bakery. Their refreshed values will help the next generation supply bread, people love to eat, to a broader customer base by developing new ways of doing business and staying true to this purpose.

It may not be explicit but purpose will be inherent in the story of how the founding idea grew into a successful business. Already trusted more than non-family businesses because they look to the long term and prioritise broader stakeholder interests, purpose acts as both lens and conscience for decision making in family businesses. It helps stakeholders understand the reasons for actions taken and reassures them that they will deliver the right results.

Values in action

"Values are the tools that bring your purpose to life. Neither are effective on their own."

Hannah Harris, PwC UK Family Business Leader

The majority of our UK respondents are confident they have a clear set of values and they recognise the benefits especially in the areas of staff retention, recruitment, and business reputation. Our UK participants also believe values help the bottom line with around three-quarters of them agreeing that their values have created a competitive advantage and increased revenue and profitability. Putting their values to work, 79% of our survey respondents communicate their values to their employees and 63% communicate them to their customers on an ongoing basis. For some, having them written down ensures consistency and gives a feeling of being non negotiable. More than half though rely on verbal communication and behaviours.

“We talk about our values a lot, they are embedded in the culture and if people strive to live our values, it’s picked up by their peers, it’s not just about management.”

Mark Beard, Chairman, Beard Construction

HMG Paints’ values are at the core of everything they do. John Falder, Managing Director of HMG Paints explains, “they are the first pillar of what we do and why we do it. Our values of decent, worthwhile, secure underpin what we are all about. None of them are more important, because they work together. Those three words are our benchmark for decision making.” There is a genuine passion for paint at HMG Paints and bringing their values to life in every decision has helped HMG Paints to become leaders in their market and build loyalty in both their customers and their people.

Values determine customer experience

For many family businesses, a passion for customer service is at the top of the list of values that matter most to them and make them successful in business.

“At the end of the day without customers we haven’t got a business.”

Kathryn Jones, Sales & Marketing Director, Castell Howell

Speak to anyone in Castell Howell and you will soon discover the customer is very much front of mind. If you need their help out of hours you speak directly to Kathryn or her father. It is their customer values which sets them apart from the multinationals. Knowing lots of their customers personally, for them it is about “being large enough to cope and still small enough to care.” For Scottish Leather Group one of their core values is managing the impact they have on the environment; finding like minded customers has both strengthened existing relationships and helped them forge new ones.

“I see no reason why values should change, but the way we practice those values may well change.”

James Lang, Director of Scottish Leather Group

What should you do next?

Assume nothing

You may be comfortable with your purpose and values however your next generation, new employees, customers may not be aware of them and how they fit in your business.

Be consistent

It may be your family and business purposes are not aligned. Figure out how to bridge the gap. Put it on agendas for family meetings to maintain alignment. Does someone in the family need to own and drive it?

Document your values and purpose

Write them in the context of how they will be used.

Practice them daily

  • Are they part of the daily life of your business?
  • Do you apply purpose as a lens to decision-making?
  • Do your employees share your purpose?
  • How can you work with local organisations to help bring your purpose and values to life?
  • Do you use values in your recruitment and employee appraisals?
  • How do your employees use the values everyday?
  • Be ready to adapt your values where necessary to keep them relevant.

Track them

Using your values as a basis for your non financial KPIs can help you monitor their progress. They should also be part of your reporting on the performance of your business including to other family members, employees, customers, and investors.

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Contact us

Hannah Harris

UK Family Business Leader, PwC United Kingdom

Tel: +44 (0)7764 958585