This time of year represents a significant transition period for many, as college experiences are wrapping up and recruiting is in full swing. The good news for 2019 graduates, and employees in most career verticals and experience ranges, is that the job market is strong. While that is great for graduates looking to start new careers, or longer-tenured employees looking to make a career change, it is a concern for employers. Many employers, including family businesses, are finding that in this tight market, they have to go above and beyond traditional recruiting tactics to ensure they’re bringing the best people into their organizations.
Concern from employers was on full display in a recent survey by PwC, which for the first time in the survey’s history found that more leaders (85 percent) cite attracting and retaining the best talent as a more important personal goal than improving profitability (76 percent). When asked about top challenges to their businesses, family business leaders cited securing the right talent to take the company forward as their largest concern, even surpassing their concerns about spurring innovation within their organization.
So, what can family businesses do to help combat these fears, and ensure that they’re attracting and retaining the right talent?
The good news is that family businesses have some inherent advantages, as compared to other corporations. To get a leg-up in the ‘war for talent’, family business leaders should take a holistic approach to recruitment. One that makes the most of the built-in advantages they have while also investing and committing to policies that attract the talent they need – from entry level roles all the way to C-suite executives.
Lean into Family Values and Principles
The largest competitive advantage family businesses have in attracting top talent rests in strong cultural values and reputation. A separate global survey of family businesses found that 75 percent of leaders felt that having a clear set of values created a competitive advantage.
In the next two years, we expect family businesses to rely even more on their operating principles and beliefs to stand out to potential employees and to preserve their reputation with customers. Family business leaders, including Victoria Mars, the former Chairman of the board of Mars Inc., align with this approach. Mrs. Mars noted in our family business report that it’s unlikely that Mars would have been as successful building its business without the use of their ‘Five Principles’ to guide how they conduct their business. Other leaders agree, with over 70 percent of US family business leaders polled in our survey believing that their company values create a competitive advantage for top talent.
Fernando Simões, Chief Executive of the JSL Group, believes in finding the right employees whose own personal values align with the values that he, and his father before him, established for the company. “We always seek to hire people who have principles in their DNA that are in line with our values.”
Simões isn’t alone in value-driven hiring. G.M. Rao, founder of GMR Group, also believes that it’s not just about competence and experience, but that personal values, aligned with the company values, are of the utmost importance when it comes to hiring. “A person could be an outstanding performer, but we examine if his or her value systems are good.”
Invest in Digital Transformation Strategies
Another way that family businesses are approaching talent attraction, in an indirect but critical way, is through investing in digital transformations and employee reskilling. Business leaders across the spectrum acknowledge that advances in digital technologies represent an unprecedented opportunity to disrupt the workplace and address customer demand. Technology’s ability to eliminate repetitive, unproductive human tasks, allows employees to focus on work that is more impactful and meaningful to them – improving their overall work experience.
For these reasons, over half (52 percent) of family businesses are expecting to undergo operational transformations in the next two years and expect to see ‘significant strides’ in digital capabilities by 2020. By investing in digital transformation efforts, family business leaders are in turn investing in technology that increases employee productivity, while also allowing employees to engage in the type of meaningful work that attracts, and retains top talent.
Create a Continuity Plan that Employees Can Feel Secure About
For many potential and current employees of family businesses, job security can be a strong attraction and retention tool, which is of growing concern as digital disruption continues to make, and break, companies at an accelerating rate.
Family businesses, which are often multi-generational, convey a sense of familial commitment to the long-term success of the organization in a way that other companies do not – after all, businesses are personal when they are run by a family. For example, a family business has the ability to plan growth strategies for ten years down the road, whereas other companies that answer to shareholders may have a shorter quarterly perspective that could potentially hinder long-term growth. As the S&P numbers indicate, it’s important to remain vigilant.
Despite the ability to plan further out for growth opportunities, family businesses tend to struggle in one area of long-term strategic planning: continuity planning. One statistic from our most recent family business survey that could concern top talent is that only 18 percent of family businesses have a robust succession plan in place. While this is an inherent business issue in itself, it can also deter employees from joining if they aren’t confident that the organization has a leadership continuity strategy in place.
This can be particularly impactful for outside senior talent, who may be unsure what, if any, leadership growth opportunities may exist for them, if there is uncertainty about the future role of family in the leadership of the business. Creating a robust continuity and succession plan gives both current and potential employees an enhanced sense of job security, and belief that the company is planning for the long term.
Why this Matters
In a tight labor market, there is no silver bullet solution for family businesses to attract and retain top talent. Family businesses have an edge against traditional competitors, but it will take a confluence of factors working together that draws in the right talent. As we enter this graduation season, and tech-savvy Gen-Zers look to enter the workforce, and other top talent looks for a professional change, family businesses can use these pillars to ensure they are attracting the right leaders and skill sets to strengthen and grow their business for the next generation.
Jon Flack is a Leader of PwC’s Family Business Services Practice.