PwC’s 2023 Family Business Survey ‘Transform to Build Trust’ polled over 2,000 Irish and global family businesses across 82 countries published in Ireland last month. It reveals double-digit sales growth for 55% of Irish family businesses in the last financial year, up from 22% in 2021. Irish family businesses report higher levels of sales growth in the last financial year compared to global peers (Ireland: 84%; Global: 71%). 

A Year in Review

Family businesses in Ireland have experienced increased growth compared to previous years, with 84% of respondents having had a strong financial year. This compares favourably to responses to the same question in 2021 when 67% of Irish respondents experienced growth in the previous 12-month period.

Growth ambitions demonstrate a more resilient Irish private market: 82% of participants hope to continue their growth trajectory over the next two years compared to an average global response of 77%. Many of these participants (55%) aim for double-digit growth over this two-year period. In addition, only 3% of Irish businesses foresee a sales reduction in the same period – significantly lower than the global figure of 8%.

Growth and profit are key for Irish family businesses in terms of enabling the family to invest in their businesses’ future. Most Irish respondents (75%) believe making a profit is the best way to ensure the family business achieves its overall purpose. It is also their primary goal, as the business cannot grow without profit. Given the growth ambitions for the next two years, it is unsurprising that generating long-term value for shareholders and investors is the top priority for Irish family businesses.

Key Survey Findings

As challenging macroeconomic headwinds impact businesses globally, Irish family businesses in 2023 are largely committed to protecting the core business, covering costs, and surviving over the next two years (Ireland: 58%; Global: 44%), rather than introducing new products and services (Ireland: 37%; down from 44% in 2021); expanding into new markets (Ireland: 32%; down from 47% in 2021) or increasing investment in R&D and innovation (Ireland 26%). Just over one in five (24%) Irish family businesses say that attracting and retaining key talent is a top priority (Global: 12%) – despite the understanding that employee trust is critical to business success (Ireland: 76%; Global: 68%). 

At the same time, Irish family firms are comparatively more likely than their global peers to form the view that they are very advanced in areas such as their ability to adapt/make decisions quickly (Ireland: 68%; Global: 55%), having quality control systems in place (Ireland: 66%; Global: 48%) and that their leadership encourages a culture of accountability (Ireland: 55%; Global: 43%).

High aspirations on sustainability and ESG, but more action needed

This year’s survey reveals that the majority (64%) of Irish family businesses feel that they have an opportunity to lead the way in sustainable business practices, recognising that they have more to do in terms of focus and action. 

Most Irish firms, like their global counterparts, admit that ESG is not an area of great focus right now. For example, only 16% of Irish family firms have a very advanced ESG strategy (Global: 15%). Just four out of ten (42%) have a person or a team responsible for ESG (Global: 43%). Less than half (47%) said that reducing their organisation’s carbon footprint is a priority in the next two years. It is worth noting that this statistic is up from 35% two years ago (when the survey last took place), it is still far ahead of global peers’ results (20%). Very few respondents reported that taking care of their impact on local communities is a priority. 

Mind the trust gap 

Fundamental to the unique challenges in the management of family businesses is trust. The research highlights that family businesses that are purpose-led, generally experience higher levels of trust. The survey reports that trust levels in Irish family businesses are strong and have advanced from the last survey, with 74% of Irish family businesses stating that they have a clear sense of purpose, up from 70% in 2021 (Global 2023: 79%). Irish respondents also indicate stronger results than their global comparators. For example, 74% say that they are fully trusted by suppliers (Global: 59%); 68% say they are fully trusted by customers (Global: 51%); 84% are fully trusted by family members (Global: 74%). 

However, like their global counterparts, the survey also outlines that Irish family businesses need to be more proactive in building trust with certain stakeholder groups, they need to mind the trust gap. For example, 89% of Irish family businesses believe that it is essential to be trusted by customers, but only 68% report to be fully trusted by this stakeholder group; 76% believe that it is essential to be trusted by their employees, but only 57% report to be fully trusted by them. And while trust levels between family members is quite high, still around a fifth of Irish respondents admit that trust is low between certain types of family members i.e. between Next Gen family members and the current generation, between family owners and non-family management. 

Irish family businesses need to take more actions to build this trust. For example, 84% do not have a clear and communicated ESG strategy (Global: 85%); 84% currently do not have a clear purpose statement and commitment that advances diversity and inclusion (Global: 79%); 63% do not have transparent communications (Global: 66%) you. The single key challenge to building trust with stakeholders, according to the survey, is disagreements among family members. 

Focus on digital capabilities in Irish family firms fall

Digital capabilities are critical to supporting governance structures and managing real-time information that feeds into decision-making processes. However, only four out of ten (39%) Irish respondents stated that they have strong digital capabilities (Global: 42%). Furthermore, less than half (42%) of Irish family firms report to focus on improving digital capabilities over the next two years and has fallen from 48% in 2021. And with cybersecurity being an ongoing business challenge, it is worrying that just 13% confirmed that they are very advanced in the area of actively protecting their private data (Global: 29%). 

Irish family firms likely to have more women on their Boards than global peers

The research highlights that having a more diverse Board is strongly associated with stronger financial performance. The Boards of Irish family firms (74%) are more likely to include women on their Boards than their global peers (Global: 69%). However, a third (32%) of Irish respondents have no representative from a different industry background on their Boards (Global: 26%) and over half (55%) have no one under the age of 40 on it (Global: 57%). 

Irish survey respondents admit they have more to do with respect to diversity. Just 16% of Irish family firms have a well advanced commitment to progress diversity and inclusion (Global:21%) and only a third (34%) have a person or a team responsible for diversity and inclusion (Global: 34%).