Managing change in family businesses
There is no escaping the fact that change is a fact of life. And it is inevitable for all businesses too – regardless of their size or sector. However, the effective management of change is essential for any organisation, but especially so for family-run businesses. Family businesses are often more resistant to change, which is understandable because any alteration to the business not only has an impact on the company but on the family as well. However, there may be times when they are forced to adjust in order to adapt to the environment. This has been reflected in the majority of family businesses I have dealt with over the past year; when the economy has forced them to be more efficient and effective in their activities.
As well as economic changes there are a number of external pressures, forced on family businesses, which require them to review their activities, including:
– Competition – an increased number of competitors in their sector and geographic location will require a different approach. Whether the firm needs to alter its unique selling point, add extra features to the product or offer post-sale services, the product offering will need to be adapted
– External bodies – product specifications, tax changes and employer regulations will force change on internal systems and routines
– Technology – this changes gradually but products and services, and the machines used to create products, can quickly become outdated
To help make the implementation of change successful it needs to be managed effectively. There are four areas which should be considered:
Higher level management must be committed to change. This must be filtered down to the rest of the business, which will help to ensure a culture which embraces change.
The culture within a family business is very strong and so it is more than likely that all employees, both family and non-family members, will have a similar ethos. This will help develop a shared vision which, if higher level management let it, can be a positive attitude towards change.
To enhance the ‘positive change’ culture, allow all staff to contribute ideas about how the business can adapt, plan in training and keep all employees informed of any progress.
Capability and capacity
Ensure you can commit the time, finance and effort to make change successful. Conduct a cost-benefit analysis and include the upfront costs, for example new machinery and employing extra staff, and also plan for any unexpected costs. These can include any re-branding, retraining employees and even relocation.
Coordination and communication
Sufficient research should be conducted to help plan how any change will unfold, which will also make a significant contribution to a successful transition. The execution will need to be reviewed, and some areas may need to be revised, in order to ensure effective implementation. To monitor the implementation you will need to decide on how you will measure success. Will it be based on sales, the amount of new customers you get or improved product quality? Benchmarking is also a very useful tool which allows you to see how your company compares to others in the area. An outside perspective of an auditor or advisor is crucial to ensure your business evolves and continues to perform in a rapidly changing, and extremely competitive, marketplace.
It is important to preserve the unique advantages of family businesses; culture, trust and determination to succeed, but it is also important to not let these factors prevent you from moving forward.