.jpg)
People trust family businesses significantly more than business in general (75% vs. 59%), according to the 2017 Edelman Trust Barometer Special Report: Family Business. The report also found that given the choice, people would rather work for a family business than business in general, and—if they know a company is a family business—are three times more likely to pay more for its products or services.
That trust, however, sits on an unstable foundation: family businesses are estimated to create 50-to-80% of jobs globally (according to the Family Firm Institute), but fewer than one in three respondents see them as job creators. And compared with nonfamily businesses, family businesses are much less likely to be considered long-term thinkers (45% vs. 21%), innovators (45% vs. 15%), or drivers of financial success (43% vs. 15%).
Although the vast majority of the world’s largest family businesses practice philanthropy (according to EY data), only 17% see them as leaders on societal challenges.
“Historically, family businesses have been reluctant to share even the most basic information about their business and family heritage,” said Richard Edelman, president and CEO of Edelman. “In an era marked by distrust in institutions and concern about growing wealth inequality, this playbook of a low-key presence and let-the-results-speak-for-themselves behavior will no longer work.”
The Family Business report also points to a growing distrust of next-generation family business leaders and wealth. Next-generation CEOs are 17 points less trusted than founders, and respondents also believe that next-generation CEOs are more likely to mismanage the business (63%) and are less passionate and committed (56%). By massive margins, when compared to earned wealth, people do not think those who inherited their wealth deserve what they have (66% vs. 40%), nor do they see them as people worthy of admiration or respect.
Although seven in 10 respondents agree that wealthy individuals should channel their wealth into society through foundations and other vehicles, this expectation is tinged with skepticism, with 78% agreeing that wealthy individuals engage in philanthropy for self-serving reasons, such as to gain political influence, to assuage guilt, or for vanity.
Despite these challenges and misperceptions, family business is well-positioned to counter the skepticism. Family business has a seven-point advantage over nonfamily business on being respectful of local customs. Family business is also given significant credit for creating value locally by keeping profits in the countries in which they are earned; respondents ranked this as the No. 2 area of strong performance for family business, versus No. 13 for business in general.
Family business also enjoys a huge advantage with talent. The data shows that employees of family business are more committed than those who are not employed by a family business. Two-thirds (66%) of respondents employed by a family business say they want to do the best possible job for customers, versus 56% of employees at nonfamily businesses.
“Family business has both the ability and the responsibility to step up and take a stand on issues that affect customers, employees and society,” said Edelman. “Now is the time for family companies to act by showcasing the value of their leadership and contributions.”
That trust, however, sits on an unstable foundation: family businesses are estimated to create 50-to-80% of jobs globally (according to the Family Firm Institute), but fewer than one in three respondents see them as job creators. And compared with nonfamily businesses, family businesses are much less likely to be considered long-term thinkers (45% vs. 21%), innovators (45% vs. 15%), or drivers of financial success (43% vs. 15%).
Although the vast majority of the world’s largest family businesses practice philanthropy (according to EY data), only 17% see them as leaders on societal challenges.
“Historically, family businesses have been reluctant to share even the most basic information about their business and family heritage,” said Richard Edelman, president and CEO of Edelman. “In an era marked by distrust in institutions and concern about growing wealth inequality, this playbook of a low-key presence and let-the-results-speak-for-themselves behavior will no longer work.”
The Family Business report also points to a growing distrust of next-generation family business leaders and wealth. Next-generation CEOs are 17 points less trusted than founders, and respondents also believe that next-generation CEOs are more likely to mismanage the business (63%) and are less passionate and committed (56%). By massive margins, when compared to earned wealth, people do not think those who inherited their wealth deserve what they have (66% vs. 40%), nor do they see them as people worthy of admiration or respect.
Although seven in 10 respondents agree that wealthy individuals should channel their wealth into society through foundations and other vehicles, this expectation is tinged with skepticism, with 78% agreeing that wealthy individuals engage in philanthropy for self-serving reasons, such as to gain political influence, to assuage guilt, or for vanity.
Despite these challenges and misperceptions, family business is well-positioned to counter the skepticism. Family business has a seven-point advantage over nonfamily business on being respectful of local customs. Family business is also given significant credit for creating value locally by keeping profits in the countries in which they are earned; respondents ranked this as the No. 2 area of strong performance for family business, versus No. 13 for business in general.
Family business also enjoys a huge advantage with talent. The data shows that employees of family business are more committed than those who are not employed by a family business. Two-thirds (66%) of respondents employed by a family business say they want to do the best possible job for customers, versus 56% of employees at nonfamily businesses.
“Family business has both the ability and the responsibility to step up and take a stand on issues that affect customers, employees and society,” said Edelman. “Now is the time for family companies to act by showcasing the value of their leadership and contributions.”
