Following extensive research conducted by KPMG in Singapore and CPA Australia with many successful Singaporean family businesses, ‘Two sides of a coin’ a report on differing perspectives in Singapore’s family businesses was launched. The report indicates that family businesses do in fact have a unique advantage over non-family owned businesses with the following areas proving most prevalent; value-driven organizational structure (stronger sense of belonging), faster decision making (smaller chain of command than complex companies), and a significant home-ground advantage (with a better understanding of Singapore and neighboring countries). However, with these advantages comes a number of challenges, which proved to be not only due to the current slowdown in Singapore’s economy. Among the challenges described in the report, succession planning, growth and the war for talent are three areas that appear to be top of mind for many family businesses. These challenges, and with a particular focus on talent retention, will be further explored in this blog.
When it comes to growth, family businesses are increasingly setting targets beyond their local markets, aiming to enter the regional or international market. Many are realizing that their company will require additional knowledge and experience to achieve these goals and are willing to look beyond family members to find the right talent to move the business forward. The report showed that 93% of all founders interviewed said profitability is much more important to them than carrying on the family name via a business. Above maintaining family control, improved business performance and increased competitiveness are also becoming priorities for many.
Professionalization of operations is a key goal for many family-owned businesses in Singapore, though talent and control of the company can pose challenges for those looking to grow. 46% of those surveyed indicated that professionalizing their business was a priority, compared to only 41% who indicated that retaining family control was of more importance. However, in considering this family control, when it comes to planning for succession, 56% of survey respondents said there were no structured learning programs or clear pre-determined criteria used to evaluate the preparedness of a successor, with many relying on the knowledge learned over time.
Challenges to talent attraction and retention
Regardless of the industry, family businesses can face challenges when attracting and retaining talent. Almost all of the respondents interviewed indicated having encountered difficulty in recruiting and retaining good talent.
Small businesses often have to compete with larger companies or the public sector when recruiting. Competitors tend to have more robust recruitment channels, higher marketing budgets and a greater reach. There can also be the perception that working for a larger company provides an individual with more long-term career opportunities, training and relocation options. These factors can put a family-owned business at a seeming disadvantage when attracting top talent.
To respond to such pressures, family-owned businesses in Singapore often take creative approaches to find and keep good talent. Some actively work to create an appealing image for potential job-seekers; this can include selling the idea of working for a smaller company as a benefit rather than a disadvantage, offering a more flexible work environment and personalized training options, especially for new graduates.
Increasing long-term job satisfaction can also be a concern, with some recommending the redesign of roles over the long term to help maintain employee engagement. This is a matter of ensuring that a strong employee is kept in a role that fits them and their growth, which can positively influence employee retention. In addition, non-family members as well as family members should be evaluated, promoted, and compensated in the same way, based on set policies defined by specific criteria.
Leading enterprises of tomorrow
As many Singaporean family businesses are SMEs, competing for quality talent will likely require refocusing on strategic functions. Following the findings of our report, here are four recommendations to raise the bar as a family business, especially when recruiting and retaining talent:
- Make talent a priority. To effectively compete for talent requires a well-considered strategy. Companies should examine and re-think core processes, such as their recruitment and hiring strategy, employer branding, employee training and incentives.
- Understand the drivers of today’s talent. Business owners need to remain conscious of the challenges and drivers of talent in the modern world. The right talent is not only scarce, but also in demand—and increasingly demanding of their workplaces. Employee loyalty and commitment also must be worked for, not assumed.
- Innovate to maintain a competitive edge. Businesses need to focus on strengthening their value proposition to create or maintain appeal as an employer. This generally requires a commitment to continuous innovation, which can help not only in the fight for great talent but also to maintain a competitive advantage in the wider marketplace. In fact, advancements in technology have enabled family-run businesses in some cases to compete with their larger counterparts.
- Shift the cultural mindset. Hiring and retaining talent from outside of the family requires a shift in company culture, which should be facilitated from the top down.Company leadership and management need to acknowledge the power of quality talent, as well as the good that proper training and development initiatives can have on company health. One way to do this is to lead by example, with enterprise owners actively and visibly working to develop their own skills.
With the right talent strategy, strong incentives and a plan for growth and possible succession, family-owned companies in Singapore can be well positioned to achieve their goals and make their mark both locally and internationally.
For more information on the report & its findings please visit www.kpmg.com