Does the traditional definition of ‘rich’ actually resonate with today’s definition of a richer life? Can we define wealth away from the balance sheet to a more balanced life and a healthier family dynamic?
PwC’s family business team knows there’s another type of currency that’s just as significant as financial success.
Sian Steele, Head of Family Business at PwC promotes the use of ‘health checks' which her team run with family businesses to indicate the health of the family, determined by family dynamics and family relationships.
So does health of the family mirror wealth? Sadly, experience indicates a huge gap between the wealth and the health of many families.
Sian says “Successful family businesses don’t always result in happy and functional families. Sadly the reverse if sometimes the case. Building a successful family business usually comes from some sacrifices – whether that be time with the family or the business takes priority in other ways – particularly in the earlier years.”
For example, when adult children enter the family business, there should be an appropriate plan regarding their current and potential roles and responsibilities. Quality communication is critical (which involves both talking and listening from both sides) to avoid family conflict.
"Based on my experience, prevention is far less disruptive, quicker and less painful on both the family and business compared to curing a family business conflict situation"says Sian.
According to PwC’s 2016 Family Business Survey only 38 per cent of UK family businesses plan to pass the business on to the next generation, and with most family businesses failing by the third generation, multi-generational businesses and wealth are under threat.
Family businesses are failing for family reasons, not business reasons. There is too much emphasis on business matters at the expense of family issues.
For example if there isn’t effective communication between family members, this can lead to a breakdown of trust and respect. A culture of avoidance and deflection can arise. Different expectations between generations can develop. Tensions and disagreements can soon become conflict. And heightened emotions can create a volatile environment for the family business.
To prevent all of this, focus on creating a strong family environment. Give freedom to individuals in the family business to express themselves, to show their passion and to have their own self-respect. This is paramount to family continuity and family harmony.
A successful family business requires hard work, commitment, collaboration and understanding. It requires processes to support open communication, sound governance and a plan to provide the framework for family success.
It is time for UK family business owners to revaluate what rich is, rebalance their priorities and spend more time with their family and give their children something that money can’t buy – direction, guidance and support.
Yorkshire, PwC United Kingdom
North East, PwC United Kingdom
Yorkshire and the North East, PwC United Kingdom
Tel: +44 (0) 7841 468 175