Family businesses across the globe have a biased approach to planning for the future, according to a new study from leading accounting and advisory firm BDO.
The BDO Global Family Business Focus Group surveyed more than 200 families across the world in an attempt to determine whether family businesses have difficulty planning long-term.
Founding member of the BDO Global Family Business group, Australian-based Susan Rix, said the results showed that, generally speaking, family businesses' approach to planning for the future was misguided.
"What we found was that although many businesses believe they are looking ahead and implementing long-term planning methods, the reality is they're actually making decisions based more on perceptions than facts," Ms Rix said.
"A common denominator is a lack of awareness and information around what constitutes best practice for both for ensuring their operation remains competitive as well as maintaining their equity.
"Family businesses need to ensure they are more open in their communication in order to enhance their decision-making ability. While there are opportunities for family businesses in today's environment, new operating conditions also create a situation where certain preconceptions could stifle business growth."
The results of the survey were analysed by Daphne McGuffin, Family Business Consultant with BDO Canada, who found that family-owned businesses were more confident in questions relating to the family than they were to more corporate-focused concerns.
"Businesses were less confident around things like business planning, compensation, contingency planning, but were somewhat more comfortable around things like family ties and philosophy. "This would suggest that there is some truth to the myth that companies are more likely to promote and compensate relatives based on relationships rather than merit," Ms McGuffin explained.
The survey also provided an opportunity to prove or dispel other common myths surrounding family business:
- Are family businesses family-focussed or business-focussed?
- Does gender bias exist in family firms?
- Are the ‘in-laws' considered family?
"With regard to gender bias, participation in the survey suggests that is now a thing of the past, with female stakeholders experiencing greater involvement and information sharing, and taking a more active role in strategic decision-making," offered Ms McGuffin.
The study also dispelled the myth that in-laws were in fact a point of tension. Rather, families were actively looking to include these stakeholders when gathering insight.
"This level of collaboration continued when in-laws weren't shareholders or playing a direct role in the company," Ms McGuffin said.