"Family-run" businesses are transitioning away from internal leaders into more of a "family-governed" holding company model, according to a new report.
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Only 36% of the 109 family businesses polled expect family members to occupy most senior leadership roles over the next decade. Attracting high-quality external talent ranked as the top workforce challenge, according to the survey respondents. Nearly three-fourths (73%) of the family businesses surveyed said they are putting younger generations through on-the-job training, focusing on board-level governance rather than pure operations.
"The data challenges a traditional operating assumption that succession simply means passing every leadership role to the next generation," said Tracey Spivey, national practice leader for family enterprise at KPMG LLP, in a statement Thursday. "We are seeing a strategic shift from 'family run' to 'family governed.' Families are realizing that separating ownership from daily management means that the best person to grow the business, while keeping the values, reputation and long-term perspective that made it successful in the first place, may come from outside the family."
Artificial intelligence is one of the main issues facing family businesses, with 86% of the respondents indicating they are currently piloting AI or have adopted it at scale. Just over half (51%) of the respondents cited AI strategy and deployment as their most severe organizational skills gap, compared to 11% who cited finance and accounting as their biggest skills gap. Only 40% of the family businesses polled have established a formal AI governance framework. Less than half (43%) of the family businesses polled said they have already implemented AI at scale, while 33% are piloting AI today.
Most (93%) of the family businesses surveyed indicated they have a clear growth strategy for the next five to 10 years. They're bullish about their growth prospects, with 83% agreeing or strongly agreeing that their growth will outpace their competitors. Shared purpose and family reputation were cited by the survey respondents as the main value drivers of the business, ranking ahead of pure financial capital.
