Strong values drive growth for family business – PwC Survey

Fri, May 31, 2019 | By publisher


Business, Featured

By Anayo Ezugwu

PRICEWATERHOUSECOOPERS, PwC Nigeria has advised family businesses in the country to maximise the competitive advantage that comes from their strong values-led culture. The company said family businesses should put values at the heart of strategic planning and strong growth prospects.

PwC in its 2018 Nigeria Family Business Survey report published on its website said values should be clearly defined and articulated, but also strongly embedded in the business culture of family businesses. The report noted that the Family Business Survey is a global market survey among key decision makers in family businesses within a number of PwC’s key territories.

The goal of the survey is to get an understanding of what family businesses are thinking on the key issues of the day. This year’s report with the theme “Building a lasting competitive advantage through your values and purpose in a digital age” saw family business leaders globally reporting robust health, with levels of growth at their highest level since 2007.

Regionally businesses in the Middle East and Africa were the most optimistic, with 28 percent expecting aggressive growth. They are followed by those in Asia Pacific (24 percent), Eastern Europe (17 percent), North America (16 percent), Central/South America (12 percent) and Western Europe (11 percent).

Growth among Nigerian family businesses over the last 12 months is lower than the global average with only 53 percent reporting growth in the last 12 months against 69 percent globally. However, 87 percent expect to grow over the next two years with 40 percent saying growth will be quick and aggressive against 16 percent globally.

The top three challenges cited by Nigerian family businesses as mitigating the personal and business goals are economic environment (70 percent), corruption (67 percent) and regulation (57 percent). Corruption, which PwC estimates could cost up to 37 percent of Nigeria’s GDP by 2030 if unchecked, is associated with lower investment, higher prices as well as barriers of entry for businesses.

Most strikingly, the 2018 edition of the survey demonstrates a link between putting values at the heart of strategic planning and strong growth prospects. While 67 percent of Nigerian family businesses have a clear sense of agreed values and purpose as a company, less than half (43 percent) of respondents have those values articulated in written form.

Uyi Akpata, country senior partner, PwC Nigeria, said the message is clear. He urged family businesses to adopt an active stance towards company values to generate practices that pay off in real terms. According to him, a commitment to a clearly defined set of values can act as an ‘inner compass’ and provide a competitive edge for a family business as it navigates the challenges of technological and competitive disruption.

“What this survey clearly indicates, however, is that family business values are not simply the same as family values. Business values should be clearly defined and articulated, but also strongly embedded in the business culture and the day-to-day decision-making regularly reviewed,” he said.

The PwC Family Business Survey also contains insights into how the pace of technology change and generational differences are informing family businesses’ approach to legacy and succession planning. The report stated that Nigerian family businesses have a slightly lower level of perceived concern about the threat from digital disruption (23 percent) or cyber security vulnerability (33 percent), compared with global average of 30 percent and 40 percent respectively.

It also noted that 77 percent of respondents say they plan to pass management to the next generation, but only 10 percent have a robust, documented and communicated succession plan in place. Women average 30% of board members in Nigerian family businesses.

Esiri Agbeyi, partner and head private wealth services, PwC Nigeria, said a key take away from the findings is that there is an opportunity for family business owners that are committed to and adhere to a deep sense of social responsibility and sustainability to invest their resources in a manner that is consistent with their values.

“Also, the next generation is key to a family business’ lasting legacy and not involving them in plans to pass on the business risks disengagement. It’s crucial to have a written and documented plan for the continuity of the business to improve transparency and trust. The next generation needs time to build a collective sense of purpose and be supported in developing their framework for success.

“Our conversations with family businesses show that often they recognise the need to start the process, but those conversations can be difficult. Timing is crucial and so is communication to all stakeholders,” he said.

– May 31, 2019 @ 17:07 GMT |

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