TORONTO—Family-owned and operated businesses are a “good news story” in the Canadian economy but face challenges attracting and retaining talent, according to a new report.
The 2014 PwC Global Family Business Survey found that family businesses in Canada are growing.
About 67 per cent of respondents achieved top line growth in the last year, and an even larger portion—85 per cent, according to PwC—are projecting growth over the next five years.
The firm said strength and confidence in family business in Canada “is likely a result of expected continued economic recovery, as well as the ability private family companies have to remain agile amidst economic uncertainty.”
“Family businesses are making the most of the economic recovery and are pushing forward in their plans for growth,” Saul Plener, national private company services leader with PwC Canada, said in a statement.
“While they remain cautious about investing in international markets, they continue to have a strong sense of confidence and optimism towards the road ahead.”
However confident family businesses are, they continue to face challenges when it comes to attracting and retaining talent, according to the survey.
Some 71 per cent of business surveyed cited the talent gap as their top concern over the next five years.
“Family-owned companies tend to require sophisticated leadership and a diversity of skill sets, but aren’t always able to provide market-competitive compensation,” the firm said. “These challenges highlight a need for family businesses to professionalize.”
Despite the need, the PwC survey found it is on the radar for only 21 per cent of Canadian respondents over the next five years.
“Furthermore, there is a significant demographic shift occurring in Canada—baby boomers are retiring, creating a skills gap in the workforce and putting a squeeze on family businesses,” PwC said.
“This is particularly challenging for the 27 per cent of respondents looking to sell or float their companies—the aging workforce will create a highly competitive buyer’s market between 2018 and 2025, meaning that succession planning will be particularly crucial for those seeking to exit.”
Despite this, the firm said family businesses bring “considerable benefit” Canada’s workforce and economy that extends beyond compensation and demographics.
“For example, 80 per cent of Canadian respondents state that they measure success beyond just profitability, and that they are committed to retaining staff even in bad times,” PwC said. “They agree their culture and values are stronger (75 per cent), they are more entrepreneurial (71 per cent), make decisions faster (73 per cent) and take a longer term approach to setting strategy (65 per cent) than non-family businesses.”
“Family businesses add a dynamic, robust and often complex layer to the general business community, and their operational models often reflect the agility needed to survive in today’s environment,” said Sharon Duguid, director of PwC’s Center for Entrepreneurs and Family Enterprise.
“Their sense of responsibility and community spirit lends itself well to a harsh and competitive market, and if they can invest in capacity and capability, bringing in the right people with the right skills, they’ll continue to be a key pillar of the Canadian economy.”