Staffing issues could stunt success of NZ family businesses

Media Release
Embargoed until 4 November, 1am

Staffing issues could stunt long-term success of NZ family businesses - PwC

•91% NZ vs 75% global respondents believe that female and male successors will get equal consideration for leadership positions
•7% of global respondents anticipate selling the business to management within the next five years compared to double that figure in NZ
•41% NZ vs 24% global respondents feel their business is vulnerable to digital disruption, yet
•72% NZ vs 54% global respondents discuss the threat of digital disruption at board level

The 2016 PwC Family Business Survey reveals that New Zealand family businesses are worried about market conditions and finding the right staff, despite their increased growth over the past year.

The outlook for growth in NZ over the next five years continues to be positive, with a third of the respondents expecting to see steady growth and 79% expecting to earn most of their revenue from the same products.

In spite of the steady outlook, the report warns that family businesses’ growth outlook could suffer because of poor strategic planning rather than economic factors or other external concerns. In fact, many issues now facing family businesses come back to a lack of strategic planning – the ‘missing middle’ – namely having a business plan that links where the business is now to its long term goals. This means many families are unable to turn early promise into sustainable success.

“A worrying trend is that succession planning for senior roles is still taking a back seat for more than half the family businesses surveyed. It’s a recurring theme with our global respondents as well. What’s confusing is that 62% of NZ respondents feel that it is very important to ensure the long term future of the business yet 51% have no succession plans in place for senior roles, up from 43% two years ago,’’ says Robbie Gimblett, PwC Partner and Private Business Market Leader.

Sir Graeme Avery, entrepreneur and first generation business owner talked to us about what he has learnt over the years:
“I think if I had my time again I would bring in a wider range of people to consult with on an informal basis. But that’s not to say that you don’t need the disciplines of governance – you do.”
New Zealand has already seen many local family businesses moving overseas and finding success – with Sir Graeme Avery as an example of the broader successes that the New Zealand wine industry has seen in recent decades.

“However, only 31% of local respondents are currently working outside of NZ, compared to half of our global respondents. A worrying minority of 8% said they will move into different export markets, while 28% aiming to become more innovative,” says Robbie.

“An important balancing act for family businesses is staying profitable and continuing to build value for the future while investing in new products and services and making sure their business model is relevant.”

Sir Avery adds: “Right now, the future looks uncertain, but it’s also full of opportunities if you think differently… In general I believe innovation is in a company’s DNA, I’m not sure you can bring it in from outside.”

New Zealand survey respondents identified a number of challenges related to their business planning:

•Skills: 48% say their ability to attract and retain the right talent is a key challenge for the next five years

•Innovation: 62% identify innovation as a key challenge to keep ahead in the next five years

•Professionalisation: 62% of respondents say they will bring in non-family professionals to help run the business.

•Cyber security: Less than half (45%) believe their business is prepared for dealing with a data breach or cyber-attack

•Finance: 42% said they have seen stronger sales over the last financial year with a further 75% aiming for steady growth over the next five years. 81% say they will use their own capital to fund growth.

•Going global: only a third of our family businesses are operating outside of New Zealand, compared to half of our global respondents. 8% have prioritised moving into different export markets.

While our global and NZ respondents shared many similarities, a clear stand-out difference emerged over labour shortages. Nearly half of local respondents (48%) identified this as a major concern compared to only 30% internationally who are worried about finding the right staff.

-Ends-

Notes to editors:
For the full report, go to www.pwc.co.nz/familybusiness

PwC interviewed over 2,800 family businesses in 50 countries including NZ between May and August 2016, with turnovers ranging from US$5 mil to over US$1billion. The total turnover of all those companies interviewed was more than $500bn. A third of interviewees came from 3rd/4th+ generation businesses.

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