PwC's survey suggests family business owners must transform to rebuild trust with stakeholders
Only 25% of Thai family businesses have strong digital capabilities, lower than the global figure of 42%, while over 70% of these companies only have family members on the board - nearly twice the percentage of global peers, according to PwC's recent survey, 11th Global Family Business Survey: Thailand Report.
The survey results confirm the need for family businesses to review their operations in several areas to build trust with their stakeholders - customers, employees and family members - which is key to securing the family legacy and driving sustainable growth.
Part of a wider global PwC network survey, the survey involved interviews with more than 2,000 family businesses and included 44 respondents from Thailand. The report found that Thai family businesses have performed well over recent years with 59% showing sales growth, while only 14% saw a reduction in sales. This is an improvement from the figures in 2021 of 39% sales growth and 31% sales reduction.
Additionally, 68% of the respondents expect to grow their business over the next two years, which is slightly lower than the 77% globally. The top three priorities for Thai family businesses include expanding into new markets (64%), increasing customer loyalty (48%) and introducing new products and services (48%).
Despite the positive outlook, many Thai family businesses aren't taking necessary steps to build trust with their key stakeholders. This includes adopting environmental, social and governance (ESG) practices into business strategy, making a clear commitment to diversity, equity and inclusion (DEI) principles and digital transformation.
Paiboon Tunkoon, Entrepreneurial and Private Business Leader, Assurance Partner, PwC Thailand said, "Family businesses are at great risk of losing trust if they fail to embrace change. Stakeholder behaviours and expectations have changed dramatically around issues like ESG and DEI as well as organisational goals that align with individuals and society."
The report indicates that 72% of Thai family businesses don't communicate their purpose externally (59% globally), 95% don't have a clear and communicated ESG strategy (85% globally) and 82% don't have a purpose statement that outlines their commitment to DEI in the workplace (79% globally).Digital capabilities remain low
As businesses around the world are transforming their organisations to be more digital while using data to tailor a customer-centric experience, Thai family businesses are failing to prioritise the digital transformation of their operations.
Only 27% of Thai respondents view improving digital capabilities as a top priority (44% globally), while 25% believe they have strong digital capabilities (42% globally).
It's also clear that most Thai family businesses are ill-prepared for data governance. Only 27% say they actively communicate and protect the use of data (29% globally) while just 14% effectively respond to data privacy breaches (27% globally), the findings showed.
Handling family conflict and trust in NextGen members
Conflict can happen when family members have different views or beliefs that clash, which could potentially derail established trust with stakeholders. The report found that almost half, 49%, of Thai family businesses choose to handle conflicts within the immediate family, with only 18% using a conflict resolution mechanism such as family constitutions, shareholder agreements or even wills.
Trust in NextGen members and board diversity are also low. Thai NextGen members received lower trust (20%) when compared to their global peers at 43%. Some 71% of the respondents said the board comprises only family members - double the global figure of 36%.
Lack of diversity presents a significant issue for future business prospects as new board members are important for bringing fresh perspectives and preparing the business for change.
As for giving employees a voice, the survey found that less than half, 47%, of Thai family businesses have an internal process for employees to question or appeal management decisions (57% globally).
"Embracing openness and diversity is another way to build trust and bring sustainability practices to the business. It will help family businesses experience different perspectives while attracting and retaining talented people for the organisation," Paiboon said.