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Family businesses: Growing the professional way
MANY family businesses in Singapore are conscious of the need to professionalise their operations but struggle with how much control of their enterprise they should cede.
According to a study of family businesses by KPMG Singapore and CPA Australia, almost half (46 per cent) of 100 family businesses surveyed said professionalising their business was a pertinent issue.
Many would also prefer to prioritise business performance to remain competitive, ahead of keeping family control. Some business owners suggest they will need talent with the right knowledge and experience to grow their business, and they are ready to look beyond their pool of family members for these capabilities.
"Family businesses are no longer just competing for a slice of the domestic pie, with many setting targets to enter the regional and even international market," said Chiu Wu Hong, partner and head of enterprise at KPMG in Singapore.
"As they set their sights on expansion, they are seeing the need to broaden their talent base to improve their suite of product and service offerings," he added.
Having new staff with the relevant experience and expertise in their lines of work can also help to bring fresh insights to companies.
Mr Chiu said this enables companies to explore novel ways of doing things that could ultimately result in increased productivity and competitiveness.
The study findings suggest a mixed picture on how prepared local family businesses are for succession.
Nearly seven in 10 respondents (68 per cent) said they have implemented initiatives to address their succession planning issues. But less than half (44 per cent) have put out training and grooming programmes for successors, suggesting that most family businesses rely on informal methods for succession planning.
Supreme Components International, a franchised distributor of hi-tech electronic components and LED lighting solutions, took a more structured route to succession with a well thought-out philosophy.
"It starts with having a clear plan of identifying the high-potential leaders, putting them through various tests to see how they react under pressure and then mentoring them," said Vick Aggarwala, president and CEO of Supreme Components.
"The principle of meritocracy has been upheld all this time, where regardless of whether you are a family member or an outsider, you must have the pre-requisite skills for the job," he said.
Talent attraction and retention
In terms of talent attraction and retention, family businesses sometimes face a challenge of getting good people and may need to work creatively on this front.
Mr Chiu said many smaller businesses have to compete with larger organisations and the public sector in securing top quality talent, who have the skills and competencies to choose where they want to be based.
There could also be a perception that working for larger entities provides fresh graduates with more options for training in various functions, industries and geographies.
"These larger organisations and the public sector may have more systematic recruitment channels in place, along with higher budgets for marketing and branding, but SMEs are also stepping up efforts to improve their image and can offer more personalised training for fresh graduates," said Mr Chiu.
Philip Liew & Co leverages its small size to attract and retain its people. "As a small accounting firm, with a simpler organisational structure, we have a greater degree of autonomy when it comes to creating initiatives to differentiate ourselves as a model employer, such as adopting flexible work arrangements and better work-life balance to cater to specific needs of our staff," said Lisa Liew, managing partner of the accounting practice, which has about 30 staff.
Supreme Components said what matters to its employees is its positioning as a growing company that is well-respected in the industry.
"They see the potential and growth prospects of our company, how we are taking the Singapore brand abroad in expanding overseas and, more importantly, they join us knowing that our business model is sound," said Mr Aggarwala.
Mr Chiu added: "Local enterprises have much to offer to employees, with many providing a company culture that is built on trust."
Redesigning job roles can also play an important part in engaging these employees to raise job satisfaction.
"It ensures that the right person holds the right job, as this would eventually translate into better productivity and employee satisfaction, and positively contribute to staff retention," said Mr Chiu.
Leading enterprises of tomorrow
Many family businesses in Singapore are typically SMEs. Raising the bar for quality talent in these enterprises should therefore encompass a refocus on their strategic functions, hiring processes, training and employer branding.
Enterprise owners will need to be cognisant of the challenges of today's talent, one that is scarce, mobile, increasingly demanding and with ever-changing needs that will see their loyalty and commitment waver.
Enterprises will also need to continuously create and innovate developments and interventions within the organisation to maintain their competitive edge. They will need to introduce new strategies to strengthen their value proposition and remain attractive as an employer.
Ultimately, achieving change requires a mindset shift. A cultural swing in the organisation will only be facilitated by direction from the top.
The above methods and efforts will be rendered futile and ineffective if top management fails to recognise the power of good talent along with training and development.
It is worthwhile for enterprise owners to lead by example by evaluating their own skills and honing those which they lack.
A better utilisation of incentives, more pathways for expansion and partnerships, and schemes that nudge SMEs to internationalise will attract and retain competitive talent. These will be the promising new leaders capable of taking enterprises into the next era of growth.
- This series is brought to you by CPA Australia to share knowledge on topical issues relevant to business, finance and accounting