Cultivating a Secure Work Atmosphere in Family Businesses – Here’s How It’s Done

The world has witnessed the dramatic downfall of several corporate giants in the past few decades. It’s no secret that tough times call for difficult decisions, and when the chips are down, it’s the organisations with strong values and management that do the best. Despite the fact that the economic downturn has severely affected sectors like retail and banking, as well as some major players in the technology industry, family businesses are proving to be resilient in this environment.

In light of the mass layoffs we have seen this season, it seems pertinent to talk about how Indian family businesses are fighting against the odds to overcome the current economic setback. One of the main reasons these businesses can survive is because they are built on strong foundations. These foundations include a family-oriented culture, respect for tradition and adherence to values like honesty and integrity.

In addition, family businesses have a strong sense of ownership and responsibility toward their employees. This means that they are willing to go above and beyond when it comes to providing support for their employees when they need it. So what’s the secret to family business success? 

Also read: Marico’s Newly Founded Inclusion Diversity Council to Increase Gender Diversity to 30%

Better at Weathering Economic Downturns & Providing Secure Employment

Family businesses have loyal customer bases and supportive employees to rely on during difficult times, and hence, are often closely tied to their local communities. The recent spate of layoffs is not the first time that family businesses have shown loyalty to their employees. As history speaks for itself, even during the recession of the early 1980s, the top global family businesses demonstrated their commitment to their employees.

There’s one thing that’s helping family businesses weather the storm better than most––a secure work atmosphere––and it doesn’t just apply to employees. Even owners and managers of family businesses are more agile and able to adapt to changing market conditions, as they are invested in the business’s success. 

According to a report by EY, the world’s top family-owned businesses are growing faster than the global economy. They can balance growth with a commitment to family, which extends to employees and other stakeholders. 

As the Harvard Business Review has stated previously, family businesses are more likely to retain employees than non-family businesses.  It also states that the attrition rate at family-owned businesses is much lower. While the average employee turnover at a non-family firm is 11% per year, it is only 9% of the workforce at family firms.

But how do they provide a secure work atmosphere? It seems to boil down to these key factors:

High performers in hard times: When times get rough, family businesses tend to stand strong, working together with their employees and customers to find solutions instead of letting decisions be made for the top line.

Always financially disciplined: India has 111 publicly-traded family-run companies valued at USD 839 billion—the third-largest number of family businesses in the world. Indian family businesses are a major part of the economy, contributing 70% of the GDP as of 2021. By 2022, that number increased to 79% of the national GDP – that’s an astounding number! This kind of growth, particularly in the wake of Covid-19, shows how important family businesses are for our economy.

Investing in long-term perspective: It’s not just the fact that they tend to have a longer time horizon than their public counterparts— family businesses can think about generations rather than quarterly earnings targets. It’s also the fact that even when times are tough, they tend to be able to make decisions based on what’s best for the long-term health of the business, instead of just making sure they hit their bottom line.

Also read: Increments and Attrition Expected to Witness Lower Trends in 2023: Report

Keeping the head  with a minimum attrition rate

As the Harvard Business Review has stated previously, family businesses are more likely to retain employees than non-family businesses.  It also states that the attrition rate at family-owned businesses is much lower. While the average employee turnover at a non-family firm is 11% per year, it is only 9% of the workforce at family firms.

It’s more important than ever for businesses to cultivate a secure work atmosphere for their employees in an increasingly competitive and volatile market. It has been proven multiple times that even over promotions and pay rises, employees tend to prioritise job stability and a secure workplace. Therefore, it’s important to have a good understanding of how employees feel about their jobs and act in accordance.

When it comes to family businesses, one might find it difficult to understand why they should be treated any differently. But the one thing that makes them stand out is the fact that they are committed to unwavering values and principles, which define their identity and set them apart from other companies. 

Moreover, it is encouraging to see family-owned businesses standing by their employees through highs and lows. In the current business climate, it is family businesses that are banding together with their employees to ensure that all their stakeholders make it through the worst in reasonably good shape.