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Published in Economic Development

Family-owned firms must drive awareness about their advantages to potential hires

BY Sunday, September 11, 2022 06:44pm

A Q&A with Ana Gonzalez, director of the Family Owned Business Institute at GVSU

Scads of headlines have chronicled the hiring crisis that businesses of all kinds face when trying to find qualified people given the unprecedented labor shortage across the country. It’s a challenge that family-owned and non-family-owned businesses are grappling with, said Ana Gonzalez, Ph.D., director of the Family Owned Business Institute at the Grand Valley State University Seidman College of Business. However, she said that in some ways, family-owned companies often have a leg up on their counterparts. Gonzalez spoke with MiBiz about ways family-owned companies can bring in new employees, why workers tend to stay with family-owned firms for the long haul and best practices for all companies to deal with the rapidly evolving workforce. 

Ana Gonzalez, director of the Family Owned Business Institute at GVSU Courtesy Photo

 

Family-owned businesses fared pretty well during the pandemic. Why do you think that is?

Family businesses have some advantages, even though people usually perceive them as maybe not as strong or that they don’t have enough resources to thrive. I believe that because they are family-owned, they have some capabilities that help them succeed when crises like COVID occur.

When COVID occurred, because of the way family businesses behaved toward their workforce, they tended, on average, to do the right thing. They had less of a ‘I have to save the business, and I don’t care what happens’ approach. In a family business, the employees are part of the family, in a way. They took care of their people, and their workforce mostly returned. They are able to make their labor force committed to the family businesses because they tend to treat their employees better. 

I recently finished some research with a team and we found that, regardless of their strategy, family-owned businesses had a better chance of surviving the pandemic than non-family-owned businesses.

 

How are family businesses approaching the ongoing labor crisis? 

One thing we do know is that family-owned businesses got their workforce back. The problem in the market that every type of business is encountering is finding new hires. Many of the efforts I’ve seen from family businesses involve talent acquisition plans because they are now competing head-to-head for new hires. Their employees tend to be there a long time and are very committed. Most of them came back after the pandemic. But the new hires aren’t familiar yet with the benefits. 

 

What should those companies be doing to help spread that awareness? 

Family-owned businesses need to do branding around what good employers they are. They are focusing on long-term talent acquisition to strengthen their brand so they can compete. There is a shortage of workers. New hires tend to go for the place with the best offerings, which, when you’re starting, are money, benefits and especially a career path. Family-owned businesses may offer a career path, but it tends to be less institutionalized. They must formalize those processes and benefits and market them to potential hires. 

 

You mentioned people tend to view family businesses as less capable. Why do you think that perception exists? 

First, family-owned businesses tend to be more traditional and conservative because they have emotional involvement in the business or social-emotional wealth. Social-emotional wealth is the amount of emotional endowment that the family has. The family has invested in the business, so they have both economic and non-economic goals. Sometimes, they make decisions that will affect their economic goals, and because they prioritize the non-economic (goals) in the short-term, they appear risk averse. Risk can mean debt, which can invite the bank into your business. Family-owned businesses tend to be private, making them appear less formal. 

But when facing crises like COVID or even the labor shortage and inflation, that lack of formality allows them flexibility in making decisions and pivoting quickly. They have the patience, and the shareholders understand their property. … That’s an advantage in that case. They can weather the short term for the benefit of the long term, because they have to.

 

What can the non-family business sector learn from family-owned businesses as they navigate the labor shortage?

Prioritize their workforce. We’ve seen that if a business doesn’t treat their people well, they will not last. Training new employees will be a waste of time if you don’t treat them well. Maybe that’s going to be costly, but what’s more costly? Probably losing someone you’ve trained for six months because you don’t have the appropriate leadership, policies or diversity — all things that are really engaging people in the workforce.

Families are very good at changing and innovating in crisis. No matter how large you are, you need to figure out how to make decisions quickly because you can miss the window of opportunity to change or do nothing. Again, that’s something that families-business can do very fast.

And the last one is to tap into the resources of the older generations. Family businesses tend to tap into that strong knowledge base from the previous generation — people who have had years in the industry and have knowledge that you can’t find in a book. 

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