How do we maintain momentum to restart, recover and grow businesses post covid?
Crisis management tips from family run businesses
2020 may have come to an end but sadly Covid -19 is far from over. In its aftermath businesses will not only find themselves adapting to the 'new global normal' but have to review and re-invent what the 'normal' is for them and their workforce.
As research and experts warn of continued disruption and uncertainty for the year ahead (and most likely, years to come) the impact on businesses will be felt across multiple sectors. We have already seen that those businesses which have embraced swift change, with the well being and support of their staff at the centre of those changes, have weathered the storm well. It is those businesses that are predicted to recover and thrive in the post pandemic era.
Changes have had to be implemented at a rate unknown in the past. We have adjusted to those changes, which serves as a reminder of our resilience and bounce back power. However, last year changes were driven by momentum and fear. This year, with pandemic fatigue and complacency choking the engine of sustainability and growth, that momentum has diminished, leaving many turning to traditional business models for guidance. It is such models that saw the creation and growth of family run businesses. History has shown, that at times of crisis, family run businesses often fair better.
Despite their prominence, family-owned businesses have received less media coverage than large corporations. Yet, according to the Institute of Family Businesses, there are over 5 million family businesses in the UK, generating almost a third of UK GDP and employing 14 million people.
So, what are the secrets of their success?
First and foremost, the way in which they are governed
Ownership is strongly linked to psychological know-how, which results from years of investing in the business’ governance and reputation. By integrating the business into their families, the fate of the employees, customers, and surrounding communities becomes linked to the businesses ethos. Further, governance is often connected to a series of human values, such as trust, loyalty, commitment and respect. Values that are essential to recover from a crisis.
Their pursuit of non financial gains
Another distinguishing factor is that most family run businesses will have non-financial goals, unlike large corporations that measure their organisations success predominantly through financial performance. For example, we often find family run businesses offer their employees greater flexibility and participate widely in local community initiatives. Employees are often treated like family members and find themselves better supported during difficult times, such as illnesses, childcare struggles or bereavement. Large corporation may have policies and procedures but the lack of personal empathy and delayed response can creates barriers which can lead to discontentment and low morale.
Better vision for long term goals
With the emotional attachment to the business, families tend to think more about long-term goals and succession, which in turn shows a commitment to the business' legacy and its core values. The main objective is often to secure the survival of the business and succeed in its uninterrupted succession. This approach is frequently referred to as the zoom in/zoom out approach which focuses on two parallel time perspectives. Firstly, the zoom-out perspective consisting of 10 to 12 years; then the zoom in perspective, where the scope is limited to 6 to 12 months. In adopting this approach, and by getting both prospectives right, everything else falls into place. In contrast, large corporations adopt a typical 5 year strategy, which in a time of crisis can lead to inflexibility and narrow vision.
Intuitive leadership
With smaller, often sole, leadership teams, family run businesses are able to review business needs and implement change more swiftly. Decision making tends to rest with one core individual with managerial roles occupied by like-minded individuals who have, more often than not, been trained and mentored by the decision maker. This provides a sense of stability and continuity, particularly during times of uncertainty. Large corporations rely on 'packaged training' which seldom meet the organisations core objectives and can serve as a tick box exercise.
How are family run businesses managing the pandemic crisis and what can we learn?
Based on Harvard Business Review’s definition, crisis management is the process of adapting oversight of the enterprise under conditions of extreme uncertainty in order to ensure that all stakeholders are aligned around the firm’s long-term vision, values, expected financial outcomes, and risk management measures.
During the pandemic, many family-owned businesses have prioritised governance as a necessary tool to get them through this period of uncertainty. In fact, maintaining the solidarity and commitment of family members and employees is as important to them as the continuity of the business itself.
In my experience, family businesses’ crisis management is focussed around 5 main factors: maintaining cashflow, safeguarding operations, effective communication, a flexible business model, and employee focused work culture.
Maintaining an adequate level of liquidity has been one of the main stressors family run businesses have had to manage. As the saying goes, 'Cash is King'.
In doing so, most have favoured measures to reduce profit sharing instead of laying off their employees, which it turn buys the business value in the form of loyalty and respect from the very workforce needed to help the business recover and grow. Contrast this to the mass redundancies of large corporations.
In safeguarding their operations, some of the early measures taken by family businesses were those that were later implemented by governments, for example reducing social contacts, deep cleaning of premises, closing communal areas and spreading awareness amongst their employees. And in an enterprising move, many involved their employees in finding alternatives that would reduce the business' fixed costs, for example sharing work roles, helping find cheaper suppliers, working flexible hours and supporting colleagues who were experiencing isolation or childcare difficulties. You don't often hear of family run businesses having to adopt an employee wellbeing charter; it's already in their DNA. In contrast, large corporations found themselves lead by government, which meant measures being introduced late and haphazardly, to meet with compliance.
Family run businesses have also shown an enviable aptitude when it comes to effective communication, be it with employees, customers, or suppliers, even with social distancing measures in place. They've not so much needed to 'invent a new norm' at the mercy of Zoom, Microsoft Teams or WebEX. In part this is due to years of strong, local relationship building. Studies have shown that family-owned business employees have 2 main fears: Firstly, the consequences which COVID-19 can have on their friends/families and secondly, the inevitable economic impact on the businessman as a whole, meaning they feel they have a vested interest in the businesses survival.
Family lead businesses are shown to have dealt better with the latter through proactive and personal communication, albeit in the simplest form; phone calls and WhatsApp messaging. Large corporations relied on FAQs on their websites, communication through email, blogs/podcasts, helplines or daily newsletters by their CEO, which provided little personal connection. The pandemic is foremost a public health crisis therefore it needs a personal, human touch. Large corporation, despite their resources, have found reaching out to their workforce difficult to do.
A business's structure is often challenged in times of crisis. The pandemic has shown that family run businesses were able to adapt their business models more readily with less resistance. Some businesses found it more suitable to adapt within the same business model; while others found new ones. But the take away lesson is that they and their employees embraced change more readily. Larger corporations relied on the fear of redundancy to implement structural changes, which then lead to low morale and key staff members looking for alternative roles, many choosing to move to the public sector.
Finally, in family-run businesses, the core human values discussed at the beginning of this article; trust, loyalty, commitment and respect, have remained intact. This in turn has supported their resilience; which brings us to the last factor of crisis management, work culture.
The pandemic created a strong feeling of solidarity among stakeholders including employees and suppliers, driven by the idea of facing the crisis together. These feelings remain strong today and many family businesses have experienced an increase in employees’ commitment seen through an upsurge in motivation, teamwork, and cohesion. This has and continues to be the biggest challenge for large corporations. With recent media coverage of bad workplace practices, such as discouraging testing and poor social distancing measures for staff, its difficult for employees to feel their efforts and sacrifices are being valued and that they are, truly, facing the crisis together.
As human beings we innovate, invent and improve, but our core values remain the same. Behind every successful business are human beings. With pandemic fatigue, diminishing momentum and continued uncertainty plaguing the economy's bounce back in 2021, large corporations may find some benefit from looking at family run businesses for some guidance.
If you would like to learn more about how Diversity+ can help you beat pandemic fatigue and rebuild momentum, get in touch using the link below:
https://www.diversityplus.info/contact