A cross-section of successful family-owned businesses participated in the first of a series of dynamic Family Business United Scotland (FBUS) masterclasses at Strathclyde University designed to hone strategic leadership of family companies.
The first session, titled “Family Companies: How do they manage?” was sponsored by Craig Corporate and included presentations by Dr Niall MacKenzie, Lecturer in Family Business at the University’s Hunter Centre for Entrepreneurship and Keira Proctor, Managing Director of the A Proctor Group, a family business in Perthshire which develops, manufactures and supplies specialist products to international clients in sectors including construction, rail, oil & gas.
Corporate governance matters
Dr MacKenzie outlined the benefits of establishing a strong corporate governance structure which includes non-family members. It can act as a forum to anticipate and resolve conflicts and ensure long-term sustainability. He acknowledged that while some family companies have well-developed and highly effective boards and senior management teams, others are daunted by the sometimes difficult and delicate task of creating a new structure and bringing in outsiders.
Dr MacKenzie advised that establishing an independent board with non-family members becomes increasingly important as a business increases in size and complexity.
The benefits of a formal corporate governance structure include:
- helping to attract non-family members with key skills and experience
- ensuring family members play to their strengths and make a valuable contribution
- maintaining a stable business and cohesive family unit
Career progression & conflict resolution
Common problems encountered by family businesses include internal power struggles, disputes over direction and control and sometimes communication breakdowns as families grapple with not only external competitive pressures but internal inter-generational family conflicts.
Recruiting and retaining external candidates can be difficult if there is a perception that non-family members may not progress to the top – but equally, family members must fully assess the benefits and disadvantages of bringing in non-family members. Delegates heard that it is important to manage the careers of non-family members and to ensure that they are properly rewarded and recognised. It is also important to ensure that a family-owned business can derive maximum benefit from an injection of new ideas, skills, knowledge and connections.
Succession planning critical
Family succession requires careful planning, including an early focus on leadership training and skills development. It is important to recognise that not all family members may be equally suited, keen or ready to step into a senior management role and to manage expectations and aspirations.
Family firms do not always have the luxury of choosing timing of a handover, as Keira Proctor, Managing Director of A Proctor Group can testify. Although she had worked in the fourth generation family business for years, Keira was catapulted into the role of Managing Director in 2012 when her father suffered serious health problems.
She recalled a baptism of fire in which she had to step up to the challenge and establish her own authority for the sake of the business, family and employees. She stepped into the top job after several tough years which had seen company turnover slump by £5 million in 2008 as a result of the recession. Just one year later Managing Director Allan was diagnosed with cancer and then in 2011 he had a heart attack. Keira candidly recalled the stress she endured and resistance she encountered when initially she tried to do things the way her father had.
Change delivers multiple benefits
It forced her to take a hard look at her leadership style and personal weaknesses and also those of the business. She concluded that she must address her own disorganisation, lack of punctuality and tendency to become bored while priorities for the business included addressing a lack of vision and innovation, a resistance to change, lack of accountability and poor staff engagement.
Leading from the front, she ensured that the board worked more effectively together and with their own teams and that performance and progress was measured. She introduced more effective communication which has fostered greater staff engagement. She also encouraged fresh ideas and invested in research and development which has led to new revenue streams.
The company, which has more than 125 employees, sells class-leading products to customers in 19 countries, including breathable membranes, acoustic flooring, timber cladding and vapour control layers to the construction industry and specialist insulation products to oil and gas, rail and automotive industries.
As a result of the changes Keira instigated, the business is now: “smarter, quicker, fresher and happier.” In 2015 it achieved its highest ever turnover and most profitable year and was named Scottish Family Business of the Year.
Protecting wealth masterclass Sept 8: Book now
Attendees at the first FBUS masterclass gave it a 90%+ favourable rating. Bookings are now being taken for the next FBUS masterclass which will focus on protecting family company wealth. It will take place on Thursday 8th September at Strathclyde University. Places are limited – to reserve your place click on the link below.
Attend Scottish Family Business Week October 3-6 2016
Scottish Family Business Week will be held in the week commencing 3rd October. It will feature “Meet the Owner” events and will climax with the annual conference on Thursday 6th October in the IET Glasgow: Teacher Building in St Enoch Square. There will be a keynote addresses from well-known family business owners, workshop sessions covering topics very relevant for family company owners and managers, and a panel of experts session when delegates can quiz family business owners and advisers.
These are unmissable events for anyone involved in family businesses. To book or for further information click on http://www.familybusinessunited.com/resources/upcoming-events/