Surviving a Crisis as a Family Business
Irish family businesses show resilience and capacity to adapt despite 83% negatively impacted by COVID-19 - DCU research
Sunday 24th January: A new report from Dublin City University’s National Centre for Family Business shows that despite 83% of CEOs reporting their business to be negatively impacted by the COVID-19 pandemic, Irish family businesses have demonstrated resilience and a strong commitment to continuity.
Despite a number of difficult measures taken by family business CEOs to ensure their company’s survival, such as salary reductions, temporary layoffs, and reduced hours, the research shows that trustworthy leaders have fared better, particularly those who demonstrated concern for employee well-being during the crisis, as they were viewed in a more positive light by their teams.
Surviving a Crisis as a Family Business marks the first all-island study of family business practice that includes businesses from the Republic of Ireland and Northern Ireland. It captures the lived experiences of over 250 participants from a broad range of sectors and insight into the realities they’ve been facing in their respective industries during this COVID-19 pandemic.
- 83% of CEOs report their business will be negatively impacted by COVID-19
- 79% experienced a negative impact on company sales and 63% on company production
- 98% of CEOs report that the pandemic will change their business model going forward
- Key concerns for family business CEOs over the next six-month period include: Loss of revenue (96%), insufficient cash flow (85%) and possible loss of family control of the business (25%)
- Measures family businesses had taken, or planned to take, to minimise the threat of the pandemic include: temporary layoffs 47% and permanent layoffs 28%; Reduced working hours 53% and shift to remote working 55%
Participants surveyed spoke about a number of factors they believed to have contributed to their company’s survival.
- Innovation and adaptation has been key for many, with 98% of CEOs reporting that the pandemic will change their business model going forward.
- A resilient mindset and a commitment to continuity. Participants had learned from past challenges and setbacks and cited the survival of previous economic recessions, world wars, turbulent industry cycles as being a key source of strength during hard times.
- Taking a Step Back: Family business leaders utilised business closure periods to evaluate the business through a strategic planning lens and long-term perspective.
- Seeking Out Advice and Support: 81% of family businesses utilised governmental supports to offset the negative impact of the pandemic on the business and drew upon external expertise to minimise the threat of the pandemic. 32% reported using banking institution supports.
64% of all businesses in the Republic of Ireland and 74% of businesses in Northern Ireland are family-run affairs, with family businesses employing two-thirds of the workforce in the Republic, contributing significantly to employment opportunities and the welfare of families in local communities.
Speaking at the launch of the report, author Dr. Catherine Faherty of DCU’s National Centre for Family Business, who specialises in trust dynamics in family-owned businesses, said:
"This research shows that the family ownership structure can be an advantage during difficult economic times and while leaders are having to make tough business decisions with sparse information, those leaders who have been transparent with their teams and demonstrated a genuine concern for the treatment and well-being of their employees, have fared significantly better during the crisis. We hope that this report will provide useful, practical steps and tools for family businesses managing the current crisis and future crises in years to come.”
The research was carried out by the DCU National Centre for Family Business in partnership with the Ulster University, the University of Central Florida, the Northern Ireland Family Business Forum, Harbison Mulholland and AIB Bank.
Ian Smyth, Lecturer of Human Resource Management at Ulster University Business School, said:
“The findings of this study point to the critical challenges faced by family firms across the whole island of Ireland as a result of the Covid pandemic. Nonetheless, there are reasons to be positive: the resilience and adaptability displayed by the firms that participated is commendable, as is the loyalty and dedication of their staff.
At Ulster University we are proud of our partnerships – with Harbinson Mulholland in the NI Family Business Forum and now Dublin City University and University of Central Florida as part of this extensive study. I would urge all stakeholders in the family firm sector to carefully consider the results and recommendations presented here.”
The report will be officially launched at a virtual event organised by the National Centre for Family Business on Monday 25th January at 9:30am.
Click here to register for the event.