As family businesses look to prioritize growth, they must remain laser-focused on levers that will move their businesses forward, even in the face of economic uncertainty and global challenges. For these leaders, talent will play a key role in long-term success, and leaders must lean into the cultural values and integrity inherent to family businesses to help rise above and successfully attract and retain the talent they need to thrive in any market environment. This article covers four ways to turn trust into a competitive advantage.
The workplace landscape looks entirely different than it did a few years ago. The combination of a booming economy, a global pandemic, and worker job dissatisfaction sparked the Great Resignation. Additionally, record low unemployment has given employees the advantage to be critical of employers, as well as mobile. Talent retention and acquisition are bigger priorities than ever for many companies, especially those focused on growth. Since it is likely that these challenges will persist, businesses will need an employee-centric strategy that’s built on trust and definitive action to win the war for talent.
Effective Talent Management is Key to Growth
In PwC’s February 2022 Pulse Survey, 92% of private companies indicated that hiring and retaining talent are very important to their growth. Talent retention and acquisition are also a priority for the next generation of family business leaders. According to PwC’s 2022 U.S. NextGen Survey, 75% of NextGens see talent acquisition, management, and retention as a key priority over the next two years following the unprecedented impact of Covid-19 and the subsequent labor market moves.
The Family Business Advantage
According to the 2022 Edelman Trust Barometer, family-owned businesses are the most trusted companies — and have been for the last nine years — with 67% of respondents saying they trusted family businesses, compared to 58% for privately-held, 56% for publicly-traded, and 52% for state-owned companies. Family businesses garner this trust with a clearly defined purpose and strong values that are foundational to their organization, and are derived from their family owners. These values often include a commitment to positively impacting their employees and communities and acting as a socially and environmentally responsible business. At a time when employees are looking for more meaningful work, becoming a part of a family business offers the opportunity to put their values into action and makes the time and energy they devote to their job more worthwhile.
Family businesses can leverage this inherent advantage to win the war for talent and drive growth. To do so, they must prioritize building and cultivating trust and focus on what matters most to employees.
The Connection Between Trust and Talent
Trust has become integral to attracting and retaining talent. If a business loses trust, they are more likely to lose employees. But business leaders often overestimate how much employees trust them. According to a recent PwC survey, 84% of business leaders say employee trust is high, compared to 69% of employees. This gap can lead to adverse consequences, including lower employee retention rates and a negative impact on a company’s bottom line.
And the stakes are high. According to PwC’s U.S. Trust in Business Survey, 71% of employees say they’re likely to leave a company if they lose trust in their employer and 22% of employees said they had left a job due to trust issues. Employees prioritize accountability, transparency, clear communications, and admitting to mistakes when defining what drives trust for them.
Turn Trust into a Competitive Advantage
Family businesses have historically had better retention rates than non-family firms, but even their natural resistance to turnover will be tested by today’s competition for talent. Organizations that see this challenging environment as a unique opportunity to attract talent will be at an advantage. To deepen trust with current and potential employees, family businesses should:
1. Lead and communicate with transparency.
Be transparent about what your company stands for; how you support your people; how you champion diversity, equity and inclusion; and your ESG goals and progress — then get the word out. According to PwC’s 2021 Family Business Survey, only 23% said they have developed and communicated a strategy around their ESG goals. The activity is there, but businesses are trailing in how they’re communicating their overall strategy and progress. Use your existing channels — including your NextGen — to communicate to potential and existing employees.
2. Remove silos and foster collaboration.
Employees need to understand impacts across the business. Remove silos that block the flow of information for employees as they look to create a consistent experience. Welcome new ideas and encourage creativity and collaboration across your organization. When employees feel heard, it deepens trust within your business. For example, a family business that’s operated for more than a century engages 150 of its 400 employees in its long-term strategic planning process so it has more diverse ideas and a committed group to execute on the strategy.
3. Be prepared for trust as you grow.
PwC’s US Trust in Business Survey also revealed that 75% of business executives are keenly focusing on employees to build trust. But when it comes to concrete steps, only 37% have implemented key trust-building actions such as crafting plans for crisis communications or assembling a trust steering committee. Consider how your trust practices, including listening-sessions or pulse surveys, will need to evolve as your business grows.
4. Embed ESG into your operations.
Look for opportunities to weave in ESG efforts that can have a positive impact on your business and the outside world. Many employees want to work for companies focused on making the world a better place, and companies that prioritize ESG can increase employee engagement. Family businesses have been prioritizing ESG long before it became a talking point. It’s important for organizations to take a data-driven approach with these activities in order to calculate and communicate their impact. Start by reporting out on what you’ve already done, as past results strengthen current messaging around future plans.
Lean into Values and Integrity
As family businesses look to prioritize growth, they must remain laser-focused on levers that will move their businesses forward, even in the face of economic uncertainty and global challenges. For these leaders, talent will play a key role in long-term success, and leaders must lean into the cultural values and integrity inherent to family businesses to help rise above and successfully attract and retain the talent they need to thrive in any market environment.