TaxMatters@EY – December 2015

Lessons learned from family business leaders

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David Steinberg, National Co-Leader of EY’s Private Mid-Market practice in Canada and Colleen McMorrow, Canadian Leader of EY’s Growth Markets practice.

Family businesses are the world’s economic backbone. Their drive and ambition and their enduring entrepreneurial spirit should be recognized, celebrated and supported.

That’s why EY partnered with Kennesaw State University’s Cox Family Enterprise Center to survey some of the world’s largest family businesses. In the survey, Staying power: how do family businesses create lasting success?, we looked at factors that contribute to their resilience.

Recently, we discussed the results of our survey with a panel of prominent Canadian family business leaders to better understand their perspectives and insights around key topics. We found that just as each family business is unique, so too is each family business leader.

At our family business roundtable session, special guest panellists provided us with their thoughts and leading practices around key findings from our global survey. We focused on seven success factors — succession, women in leadership, governance, communication and relationships, branding, sustainability and cybersecurity. We discovered their management practices clearly prioritize long-term growth, health and family unity, leading them to high performance, greater staying power and healthier owning families.

We’ve summarized some interesting reflections from our panel that can help shed some light on what it takes to create a lasting legacy for a family business.


Our global survey found that 87% of respondents have clearly identified who’s responsible for succession. Our panellists find that succession planning is the number one issue for their business. For some, early conversations around succession have helped with their preparedness for addressing what-if scenarios in the event of the unexpected. For the next generation, having honest conversations around future intentions and addressing gaps in skills and capabilities is critical to developing a roadmap to their future success.

For those without a clear succession plan, making decisions can be more of a challenge. Our panel shared that advisory board members and shareholders can become concerned if there’s no clear plan in place. You need to have a solid management team to help drive the business. Even when setting the stage for early discussions around who may one day take over the business, an advisory board can act as an objective party to help facilitate discussions around future leadership. All of our panellists agreed that when it comes to succession, it’s better to start sooner than later!

Women in leadership

Now more than ever, women are leading family businesses. Our survey found that 70% of family businesses are considering a woman for their next CEO. With three of our four panellists being women, it’s clear that women are making their mark. There was agreement that women need to have access to all opportunities within the ranks. The leader needs to be the best person fit for the role, regardless of gender.

Having a clear vision for the business’s future leadership and developing a well laid-out plan to help female leaders get there empowers women to excel in executive roles. Some panellists found that addressing gender roles early on is important for women to find their place in the family. Enabling women to gain access to the knowledge and opportunities of the business and providing mentorship along the way can allow female leaders to develop the necessary skills to lead the business. Our panel found that it’s important to provide opportunities to the right person and not the right gender. Whether it’s a man or woman, those who step up to the table to do more should be afforded the opportunity to flourish.


Using a board has become commonplace for many successful family business leaders. Our survey found that 90% of respondents have a board of advisors. Three of our panellists use an advisory board and advocate the need to have someone outside of the family involved in the company who can bring an external perspective and fresh ideas to the table. They can offer helpful insights around succession planning and help tackle macro issues that may become muddled in the day-to-day operations of the business.

Setting up regular board meetings and having a clear agenda are a few of the ways that our panellists agreed can help facilitate the governance process. Having an equal split of family and non-family members on the board is a great way to bring in trusted advisors who can provide their expertise to the business. For related family members, board meetings can be a great way to discuss personal issues or concerns, and can provide a venue for ongoing discussions around succession.

Healthy communication

In a family business, conflict is inevitable. Maintaining open lines of communication is essential to keeping the peace. Our survey found that 90% of respondents have regular family meetings to discuss business issues, and 70% have family meetings to discuss family issues.

Our panellists advised that having multiple touch points with cross-functional teams is essential to establish clear distinctions between roles and responsibilities. Whether it’s through formal meetings, phone calls or email, having ongoing discussions around business or family issues can allow for family and non-family members to stay engaged in the success of the business.

Setting aside time every year for a family vacation is a great way to communicate with family members and enjoy some much-needed time away from the office. All of our panellists agreed that taking family holidays together helps bridge generational differences that may exist. It helps develop a value system that family members can turn to in times of stress or conflict. Those family business leaders who develop effective ways of managing conflict are those most likely to survive — and thrive.


Family business branding can be a great way to showcase a business as the by-product of family cohesiveness. The majority (76%) of leaders in our survey refer to themselves as a family business in their branding.

Branding as a family business can be a positive aspect for some businesses, but for others it can have the opposite effect. For some of our panellists, branding as a family business allows them to be proud of what they’ve built — they identify deeply with the company and believe it’s an essential part of what defines their family. Some capitalize on the fact they’re family-owned in their marketing and communications efforts to differentiate themselves from non-family businesses and help bolster their overall brand among employees, consumers and even suppliers.

For other participants, the family nature of the business can evoke negative associations with some of their stakeholders. Appearing smaller in scale can work against some businesses who are competing for contracts with large public corporations or international companies. From their perspective, branding as a family can act as a deterrent to their growth efforts, and instead branding based on credibility and competence in their industry space is better served for the success of the business.


Giving back to the community and advancing the family legacy is at the heart of what successful family businesses do. Our survey found that 81% of participants engage in philanthropic activities, and everyone on our panel agreed that building a better future is what leading family businesses strive to accomplish.

For our family business leaders, giving back to the community is important for maintaining cohesiveness in the business and helps create a purpose-led organization. Having next-generation leaders experience the impact of philanthropy on their communities allows them to gain first-hand knowledge of what it means to run a socially responsible business.

It’s clear that successful family business leaders are increasingly finding the value in sustainability and corporate social responsibility. Our panel of family business leaders shared that running a responsible business and achieving high levels of growth and profitability do not have to work against each other. They agreed that sustainability issues and processes should be a natural part of an overall performance management practice. They believe it creates shareholder value, provides cost savings derived from limiting waste of natural resources such as energy and water, growth opportunities through developing innovative products, better risk management and increased brand reputation with customers and employees.


The issue of cyber risk is quickly becoming a high priority among family businesses. In our global survey, 83% of leaders expected their spending on cybersecurity to increase. Our panel indicated that having proper controls, reporting channels and segregation of duties and signing powers are all sound ways to help combat the risk.

The reality is that family businesses should always operate under the notion that the threat of cyber-attack or fraud is always present. Having experienced fraudulent activity in their business recently, one of our panellists opined that family businesses need to take this issue seriously, work to uncover such conduct faster and focus on minimizing its impact on the business as much as possible. Addressing cybercrime as a potential risk can help combat this emerging external threat, which has the potential to cause significant reputational and financial damage.

Lasting success

A healthy business with long-term growth potential, a cohesive family and proud legacy — that’s the ideal for nearly every family business. The family business leaders at our roundtable session were shining examples of how others can manage the challenges of succession and governance, how to navigate conflict through open communication and how to improve family unity through inclusiveness. Their insights were helpful to other family businesses and can help shape business-friendly public policy and regulation, which in turn helps more businesses, with varied ownership structures, to flourish.

View a video of David Steinberg’s key takeaways from the family business roundtable session.

View a video of EY Canada’s Strategic Growth Leader Colleen McMorrow’s thoughts on the session.

Questions family business leaders should be asking

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