It is apparent that family-owned businesses are taking a beating as a result of the current crisis. Since COVID-19 went on a rampage, many family firms belonging to industries like hospitality, travel, airline, automotive and non-food retail segments were severely paralyzed.
In a Bloomberg report penned by Ditas Lopez and Cecilia Yap, our economy “contracted more than economists expected in the fourth quarter, capping its worst year on record, as private consumption remained anemic even as more businesses reopened from lockdowns. For all of 2020, the gross domestic product (GDP) plunged 9.5 percent, the largest drop in government data going back to 1946.”
It is apparent that family-owned businesses are taking a beating as a result of the current crisis. Since COVID-19 went on a rampage, many family firms belonging to industries like hospitality, travel, airline, automotive and non-food retail segments were severely paralyzed. From an initial shock to survival and now moving to the recovery phase, these firms must deal with short-term pressures of rationalizing costs, motivating a depleted workforce, balancing pay cuts with poor sales, maintaining service levels and negotiating with unyielding creditors while maintaining the ability to rebound quickly when things turn around.
No doubt, some businesses have emerged stronger while others have been severely impacted. Therefore the role of owners and next generation leaders during this recovery period is precisely to bring a sense of inspiration and stability to the family business ecosystem.
Post Vaccine Recovery
No doubt the worst is behind us. Watching tranches of vaccines simultaneously being rolled out is a good indicator that we are no longer in a state of suspended animation. With inoculations ongoing among health workers and employers groups initiating its own vaccine acquisitions, can we finally see the light at the end of the tunnel? Or should we expect more challenges in the coming months?
To help us make sense of what COVID-19 means to business owners, it is time to ask this fundamental question: How prepared are family business owners for a post-pandemic recovery?
In a family business forum where I was a resource speaker, one founder asked me what priorities can business owners initiate to keep the family united and prepare the enterprise for the reopening of the economy?
My answers centered on governance, leadership, communication and innovation.
I cited a particular example of a family business that made a bad judgment call when they set aside the enforcement of their constitution and disregarded the role of the Family Council. They could not have done it in a bad time…dropping governance at the height of the pandemic.
The five siblings, barely recovering from a tumultuous seven-year enmity pitting three of the siblings against two and resulting in one of the two being booted out as CFO and director, suddenly finding themselves in another round of conflict, locking horns after the business was affected by the restrictive lockdowns. With every family member intervening and speaking in many voices, it was just a matter of time when the wounds of the past would be brought out in the open. And it did, with one sibling dragging the three to court and slapping them with civil and criminal cases.
Governance is critical to enterprise growth. As a PWC family business article highlighted, “it is even more vital during a crisis when the trust, transparency and clear expectations it creates can be a real differentiator, helping the family in managing the current and future challenges.”
Peter Englisch, a global family business leader pointed out, “Right now, family businesses need strong unity of the family. The family owners need to stand united, define their commitment to their business and speak with one voice. They need to send a very strong message to their employees, business partners and public that they are backing the business. If they do this right and do not compromise their values, they will build trust and confidence, and this will help them when the economic situation improves.” /WDJ