Lots of Irish family companies don't know what to do if their business causes a feud
A new study has found that companies here are finding it hard to innovate and take risks.
A QUARTER OF Irish family-run companies do not have a plan in place to deal with conflict between relatives, a new study has found.
That is according to a new global study from accounting and finance giant PwC that looks at family business, which polled over 2,800 companies in 50 countries, including more than 100 in Ireland.
The report found that 26% of the Irish businesses polled do not have procedures in place for dealing with family conflict.
That statistic has deteriorated over the last two years, when only 22% of family companies here said that they had no plan for family conflict, and compares relatively poorly to the global average of 18%.
Teresa McColgan, tax partner at PwC’s family business practice, said that in many cases, issues like company ownership “may not even be discussed or considered, which means different people are making different assumptions about the future”.
“We spend a lot of time with family businesses to work through a fair way forward, but the earlier this process can begin, the better for the continued success of the business, as it can prevent conflict and help the family become more unified for the future,” she said.
The report added: “While some family firms are managing strategic planning well, many are caught between the deluge of everyday issues and the weight of inter-generational expectations.”
Innovation
The survey also found that Irish family businesses are struggling to innovate compared to their global counterparts.
PwC family business leader Paul Hennessy said: “In benchmarking themselves against non-family businesses, half of Irish respondents believed family businesses to be less open to new ideas; the global equivalent is significantly lower, at 34%.
“Similarly, less than a third of Irish respondents believed that family businesses are prepared to take on more risks than non-family businesses, by comparison with the global average of 40%.”
Despite this there was reasons to be positive for Irish companies, as just under three-quarters of Irish family businesses expanded over the past year in comparison with about two-thirds of their global peers.
This looks set to continue, as 91% of Irish family businesses plan to expand compared to 85% globally. Around one in six firms have consistently said over the last six years that they plan aggressive growth.
Vital
Hennessy said that family firms “are a vital part of our economy and are a key driver of job creation and growth”.
“Overall, the performance of Irish family businesses and outlook for growth remain strong,” he said.
“There has been some progress on succession planning, but less so on strategic planning. Having ambition to grow, without a strategic plan of how to get there, is just an aspiration.
“Not only is it limiting their ambition to expand and grow, it could also expose them to additional risks for which they have not effectively planned.”
