By Rob Andrews with paraphrased content from Jon Flack and Renee Klein’s HBR Article September 9, 2022

The workplace landscape looks entirely different than it did a few years ago. The combination of a booming economy, a global pandemic, and worker job dissatisfaction sparked the Great Resignation. Additionally, record low unemployment has given employees the advantage to be critical of employers, as well as mobile. Talent retention and acquisition are bigger priorities than ever for many companies, especially those focused on growth. Since it is likely that these challenges will persist, businesses of all types would be well served to learn from the highest-performing organizations in the world.

Effective Talent Management is Key to Growth

In PwC’s February 2022 Pulse Survey, 92% of private companies indicated that hiring and retaining talent is very important to their growth. Talent retention and acquisition are also a priority for the next generation of family business leaders. According to PwC’s 2022 U.S. NextGen Survey, 75% of NextGens see talent acquisition, management, and retention as a key priority over the next two years following the unprecedented impact of Covid-19 and the subsequent labor market moves. Being deliberate about your employment brand, your purpose and values is the first step to building a strong culture and highly engaged workforce.

The Family Business Advantage

According to the 2022 Edelman Trust Barometer, family-owned businesses are the most trusted companies with 67% of respondents saying they trusted family businesses, compared to 58% for privately-held, 56% for publicly traded, and 52% for state-owned companies. Family businesses garner this trust with a clearly defined purpose and strong values that are foundational to their organization. These values often include a commitment to winning in their respective sectors, positively impacting their employees and communities, and acting as a socially and environmentally responsible business. At a time when employees are looking for more meaningful work, becoming a part of a family business offers the opportunity to put their values into action and makes the time and energy they devote to their job more worthwhile.

Everyone wants to be a part of a winning team. Family businesses can leverage this inherent advantage to win the war for talent and drive growth. To do so, they must prioritize values and building and cultivating trust. Most importantly, they must focus on what matters most to the employees they are trying to attract and retain. Be clear that you are looking for a particular brand of employee, not just warm bodies. Showcasing what your family business stands for, why it exists, what it values, what it’s trying to accomplish, and how each employee fits into the equation is key.

The Connection Between Trust and Talent

Trust has become integral to attracting and retaining talent. If a business loses trust, they are likely to lose employees. Business leaders often overestimate how much employees trust them. According to a recent PwC survey, 84% of business leaders say employee trust is high, compared to 69% of employees. This gap can lead to adverse consequences, including lower employee retention rates and a negative impact on a company’s bottom line. Building trust starts with clarity around purpose, values, and strategy. Today’s best employees are not just looking for a job, they’re looking for an organization of which they can be proud: where leadership is engaged, values are lived, and the right things are measured. Leaders who are transparent and communicative stand a better chance of building trust.

The trust stakes are extremely high. According to PwC’s U.S. Trust in Business Survey, 71% of employees say they’re likely to leave a company if they lose trust in their employer and 22% of employees said they had left a job due to trust issues. Employees prioritize accountability, transparency, clear communications, and admitting to mistakes when they define what drives trust for themselves.

Turn Trust into a Competitive Advantage

Family businesses have historically had better retention rates than non-family firms, but even their natural resistance to turnover will be tested by today’s competition for talent. Organizations that see this challenging environment as a unique opportunity to attract talent will be at an advantage. To deepen trust with current and potential employees, family businesses should:

Lead with Purpose and Values

It is senior leadership’s responsibility to clearly articulate the organization’s “why” and to communicate the company’s values. Be careful not to cut and paste someone else’s values, even if they sound good. Hard-charging companies like Costco, QuikTrip, Waste Connections, Mustang Engineering, Quiddity, H-E-B, and Southwest Airlines have productivity numbers that are off the chart while having very low workforce turnover and very high employee engagement. Behavior that is revered in one company may get you fired in another. The lesson here is that one size does not fill all. Start with purpose, mission, vision, values, and strategy and hire against culture fit and performance expectations.

Lead and Communicate with Transparency

Be transparent about what your company stands for; how you support your people; how your organization wins, how you champion diversity, equity, and inclusion; and your ESG goals and progress — then get the word out. According to PwC’s 2021 Family Business Survey, only 23% said they have developed and communicated a strategy around their strategy and goals. The activity is there, but businesses are trailing in how they’re communicating their overall strategy and progress to employees. Use your existing channels — including your NextGen — to communicate to potential and existing employees.

Remove Silos and Foster Collaboration

Employees need to understand impacts across the business. Remove silos that block the flow of information for employees as they look to create a consistent experience. Welcome new ideas and encourage creativity and collaboration across your organization. When employees feel heard, it deepens trust within your business. For example, a family business that’s operated for more than a century engages 150 of its 400 employees in its long-term strategic planning process so it has more diverse ideas and a committed group to execute the strategy.

Be prepared for Trust as you Grow

PwC’s US Trust in Business Survey also revealed that 75% of business executives are focusing on employees to build trust. When it comes to concrete steps, however, only 37% have implemented key trust-building actions such as crafting plans for crisis communications or assembling a trust steering committee. Consider how your trust practices, including listening sessions or pulse surveys, will need to evolve as your business grows. Develop ways to measure the strength of your culture and report regularly on your progress.

Embed ESG into your Operations

Look for opportunities to weave in ESG–Environmental, Social, and Governance– efforts that can have a positive impact on your business and the outside world. Many employees want to work for companies focused on making the world a better place, and companies that prioritize ESG can increase employee engagement. Family businesses have been prioritizing ESG long before it became a talking point. It’s important for organizations to take a data-driven approach to these activities in order to calculate and communicate their impact. Start by reporting out on what you’ve already done, as past results strengthen current messaging around future plans.

Lean into Values and Integrity

As family businesses scale while nurturing culture, they must remain laser-focused on levers that will move their businesses forward, especially in the face of economic uncertainty and global challenges. For leaders, talent will play a key role in long-term success, and they must lean into the cultural values and integrity to help rise above and successfully attract and retain the talent they need to thrive. We would love to be your thought partner regarding your talent acquisition and retention. Please give us a call.

Warmest Regards,

Rob

Rob Andrews
Allen Austin
Consultants in Retained Search & Leadership Advisory