Last Updated on Thursday, 23 May, 2024 at 2:28 pm by Andre Camilleri
67% of family businesses have a functioning board of directors that meets regularly to discuss the current performance and future direction of the family business, the Malta Chamber of Commerce said, pointing out that this was a decrease from 2022 when it was 83%
The Malta Chamber published the results a survey which was carried out during a conference organised by the chamber. The survey was conducted on businesses that perceived themselves as family businesses and those that did not believe they were currently family businesses were excluded from the survey.
From the intricacies of governance to the strategic foresight required for effective planning, the event featured a series of interventions and a panel discussion emphasising the significance of professional conduct within family enterprises. This poll also covered the following topics: policy-making, succession planning, training, governance, and family business priorities.
The 2024 survey found that 19% of family businesses with no board of directors did not have a written strategic plan, believing that they didn’t need one, whilst 66% said that “[they] need to get there”.
Meanwhile, of family businesses which did have a board of directors, though lacking at least one independent director, 19% were found to believe that they didn’t need a written strategic plan and 46% believe they “need to get there”.
This contrasts with those boards with a minimum of one independent director. In this case, only 3% believed they didn’t need a written strategic plan and 45% were working towards one. The remaining 52% had a written strategic plan.
The survey showed that these 52% were in line with the principles of good corporate governance, structure systems and policies.
Introducing the results of the survey, the chairperson of the chamber’s Family Business Committee, Silvan Mifsud, said that the survey, the second of its kind, had more questions and a larger population of 160 family businesses chosen based on various criteria such as business size, demographic and the generational maturity of the business, which were matched. Of the 160 businesses, 100 wished to remain anonymous, the reason being that family businesses cherish and maintain privacy.
The study found that 67% of family businesses have a functioning board of directors that meets regularly to discuss the current performance and future direction of the family business, the Chamber said, and pointed out that this was a decrease from 2022 when it was 83%. Furthermore, of the businesses that do have a board of directors, it found that only 31% have independent, non-executive directors who are not family members, which is perceived to be a problem.
With regard to planning, it was found that 32% have a written strategic plan that is regularly reviewed and 36% have a written succession plan, with figures remaining approximately the same from 2022. The Chamber pointed out that whilst businesses lack written strategic plans and/or written succession plans, they do realize the need for them.
The participants were then asked for their view of the importance to training employees, through the rating of related statement, which the Chamber finds important due to its concern of increasing economic with sustainability. It elaborated that increasing people in the workforce is not enough but there is a need to increase their efficiency which can be done by enhancing the skills of the workers.
In this regard, it was found that most agreed that not only was the training of employees important, but training of owners and directors was equally vital. It was also found that there was an inclination to train employees on technical aspects as opposed to communication skills such as leadership. Overall, it was found that the businesses did not have time to train the employees with links to the operator mindset, again.
The priorities of the family businesses, by ranking of importance from 1-5, was found to be the improvement of financial performance, such as cashflow, in the 1st place rising from 3rd place in 2022, on the other hand, the work market went down from 1st place to 3rd and innovation shifted upwards from 5th to 3rd priority. The Chamber said that this was due to the effect on the world’s economy between 2022 and 2024 causing inflation, amongst other issues. It said that this led to businesses understanding the need to curtail costs, including employees, and turn to technology for efficiency and cost-effectiveness.
A decrease in priority was found for organization structure and the labour force, due to the intensity of new employees, as well as environmental concerns and social responsibility due to times being challenging.
