With National Family Business Day and our Australia’s Favourite Family Business competition this September, Kochie’s Business Builders is taking a deeper look at the role of family business in 2023 and the future. A new report spotlights the competitive advantages that will help more businesses thrive, not just survive.

Family businesses are under-recognised not just in what they deliver, but how they do it.

Family businesses are built upon values. The values of a group of people, usually but not necessarily connected by blood, working towards a common goal. Something that can last for future generations and have a positive impact on the world around them.

It’s fitting that KPMG’s recent Global Family Business Survey 2023 puts sustainability at the centre of future family business success. The survey of more than 2400 family businesses from around the world identifies why family businesses have a competitive edge in creating sustainable businesses – ones that last the test of time – with ESG (Environmental, Social and Corporate Governance) principles and processes.

Robyn Langsford, who was recently appointed KPMG’s Global Lead of Private Enterprise Family Business, says it’s reflective of a broader shift in the business world from “profit at all costs to growing in a way that doesn’t ruin the scarce resources that we have”.

“That was one of the key areas that we wanted to explore,” Robyn tells Kochie’s Business Builders. “Does the family business model lend itself to more sustainable business practices relative to, say, multinationals and other forms of business?”

The answer is clear: It’s in their DNA. Family businesses know how to harness trust and evolve in order to survive; something Australian family businesses do better than many other countries, says Robyn.

“Australian family businesses have a great ability to develop loyal and long-lasting relationships with their key stakeholders, whether that’s their customers, staff or suppliers,” she explains. “They’re very aligned in terms of their values. They care about the family’s reputation, and that overflows into the way that they care for other stakeholders that they work with.”

The survey found that 43 per cent of family businesses show ‘high levels of sustainability’. According to Robyn, these are based on eight crucial factors highlighted in the report:

1. Highly structured governance

The survey found that good governance processes from the top, whether through a board or family council, keeps sustainability strategies on track.

“It’s that differentiating factor of having good governance frameworks around how the business is owned, how the family runs the business in terms of making clear what the communication channels are among family members, identifying who is family and who isn’t, and what the family wants to achieve,” Robyn explains. “It gives them a goal-oriented, vision-oriented direction in why they’re running the business.”

2. Active non-family member involvement

A huge 99 per cent of the CEOs surveyed said they had multiple roles in their family businesses. However, research shows that balancing family and external involvement is important for advancing key areas like sustainability and digital innovation.

“Having non-family members involved gives you that opportunity to get a different lens on your business and improve the way your business performs in the long term,” Robyn says.

One example Robyn has seen is when the first generation passes the baton to the next generation who make the decision to hire an external CEO for the first time. “It can be a real game-changer for the business,” she adds.

Robyn Langsford is the Global Lead, KPMG Private Enterprise Family Business and Partner in Charge, Family Business & Private Clients at KPMG Australia. Image: Supplied.

3. Dispersed family ownership

The survey found that companies with highly concentrated family ownership (between 76 per cent and 100 per cent) reported low ratings on the sustainability index. So bringing in external capital or being open to dispersing the ownership can improve the ability of a business to respond to things like major restructuring or transforming a business model to meet stakeholder demands. “It’s the external lens being brought to the ownership and future direction,” Robyn adds.

4. Gender diversity on the board

Also in the survey, family businesses that reported at least three female board members reported positive economic, environmental and social performance.

“It gives a family business an advantage in that it’s a message not to just the family group, but the business as a whole – all the employees, suppliers, customers – that women’s voices and having women’s perspectives around the table at the leadership level is really important.”

5. Digitalisation to drive change

For many of the businesses surveyed, sustainability and digitalisation were interconnected. Considering digital solutions that improve efficiencies, reducing costs and having a better impact on the environment, are all becoming core to how family businesses can hit sustainability targets at a faster rate than other businesses.

6. Charismatic or transformational leadership

Businesses with charismatic, rather than authoritarian-style, leaders ranked better on the survey’s sustainability index. “[This could be] a senior leadership person who’s able to motivate and to convey a sense of the importance of the collective identity of being part of this family business,” Robyn says.

7. Strong entrepreneurial mindset

It’s one of the superpowers of family businesses, made even more powerful by connecting financial goals with social or environmental impact.

“It’s important that families are able to pass that down the generations as the business is passed on,” Robyn says. “Just because you do need to consistently have family members who are able to pivot, think laterally and adapt if the business is going to continue to evolve, innovate and grow.”

8. Forward-looking orientation

This isn’t about false positivity, it’s about seeing the value of how investing in sustainability will impact the business, and the world around you, in the future.

“[It’s] being able to make decisions in the here and now, with finite resources, but also looking what the long-term consequences would be,” Robyn says. “If you don’t go for the immediate short-term high return, could you do something that might actually have a better impact on society or the community or the planet?”

For family businesses who feel like they need a bird’s eye view of their business to move the dial on any of the above, Robyn suggests setting aside a day to pause, reflect and work through any challenges and market opportunities.

Have your say in the 2024 Global Family Business Survey

If you’re a leader of a family business, KPMG’s 2024 Global Family Business Survey is an opportunity to have your voice heard and contribute to the report.

“Family businesses are very under-recognised, but they do make such an enormous contribution,” Robyn says. “The more that we can amplify the voice and the profile of family businesses and the contribution they make to Australia, the more we can educate our regulators and policy makers to acknowledge that group and perhaps get some targeted policies in the long term that help encourage and incentivise family businesses.”

Take KPMG’s 2024 Global Family Business Survey HERE.

Find out more about the Australia’s Favourite Family Business competition.

This article is brought to you by Kochie’s Business Builders in association with KPMG Australia.