Looking across the business world, approximately 70% of family-owned businesses fail or are sold before the second generation gets a chance to take over. A mere 10% remain active, privately held companies that continue to operate under the leadership of the third generation. In stark contrast to publicly owned firms (in which CEO’s hold the reins for an average of six years) many family businesses have the same leaders for 20 or 25 years, and these lengthy and established leadership tenures can make it harder to cope with shifts in technology, business models, and consumer behaviour. Today family firms in emerging markets face new threats from globalisation. In many ways, leading a family-owned business has never been harder.So what is the answer? Stay put or sell out? ReLocate has consulted the experts in both these fields and brings you the best ways to do either.

Tips for Growing a Family Business

Offering your offspring a fallback option
Many owner/operators of family businesses built their dreams on the idea that their children would work together with them, that they would create something lasting that would provide for their offspring in the years that follow their retirement or passing. In some situations this creates a positive and profitable collaboration as the child is familiar with the running of the business and knows the product or service back to front by the time that they take over. In other family businesses, where the business is quite successful from the beginning, the children are raised in a wealthy atmosphere and may indulge in more frivolous pursuits in their late teens and early twenties. So by the time they need to get serious and settle into their role of proprietor, they are unprepared for the task and due to lack of experience the business fails in the hands of the second generation.

Ensure essential screening and training is employed
Following on from the two situations explained above, ensuring that those family members that do join in the efforts of the family business are experienced, educated and qualified to do so, is essential to the continuation of achieving profits and developing the nature of the business. Simply being born into a family that runs its own enterprise is not qualification enough to take the lead, or even a management role. There are many family businesses that employ best practices such as ensuring their offspring have attained the proper education required of such positions (in the outside world) such as a diploma, degree or even masters. This is also coupled at times with enough relevant experience in a business outside the family business. Some families even go to the extent of having their family members apply for the vacant positions alongside non-family members.

“Everybody thinks about ‘The Succession Plan’. I had great ideas, but no successor.” Patrick Oman, Chairman, Irish Relocation Services

The family expands more quickly than the business
Quite interestingly, some families expand more quickly than the business does. Growing a business can take a few decades, and dealing with economic highs and lows, market dips and competition can take its toll. In contrast to a growing family, a business expands and shrinks with the flow of economic growth and decline. When a business founder has a few children, and each of those children take a spouse and have children of their own, each of whom are interested in taking on a role within the business, employee supply can outweigh demand. Ensure that you do not merely take family members on as staff to please spouses or continue interest from grandchildren. The business must continue to operate as a business and not cater to the emotions of growing families.

Plan for growth to include the growing family
The first two tips are about planning to avoid failure. You want to ensure there is genuine interest from family members, and that this is complimented with a solid education that meets the experience requirements from the hiring company (yours). This is about developing strategies to grow the business and create roles for the ever-increasing family members. For example: two brothers who took over the family business from their father anticipated handing leadership to their combined seven children. The brothers realised that their business would need to expand to accommodate their children to the extent that enough high-level roles could be created within the business. As their offspring completed their education and found the relevant experience to join the family business, the fathers employed the strategy of purchasing two other companies in the surrounding area with the intent of dispatching members of the next generation to run things in the other locations. This in turn generated the revenue required to support the newly employed family members as well as offering enough operational roles for them to fulfil.

Bloodline determining job function when joining the business
It happens quite often in family owned businesses: the tendency for parent and child to specialise in the same aspect of the business. This could be finance, operations, marketing or sales. However comforting this may be for the parent to teach the child their specialty and for the child to feel they are “stepping into the shoes” of the parent, this can cause problems within the business. The first issue this raises is by staying in specialised silos: managers in the next generation do not gain the cross-functional expertise required for overall operational leadership. Secondly, there can be negative consequences of close family members supervising one another. Personal dynamics come into play and this can interfere with coaching and the candid feedback that’s necessary for career evolution.

Engage the services of non-family mentors
A great way to avoid this situation is to appoint mentors that are not part of the family. Even in circumstances where the business is quite small and family members need to supervise one another, ensuring there is input from an interested external party means they can provide objective performance evaluation.

It is important to recognise that family owned and run businesses will always operate differently to publicly owned firms. There are many positive elements of working closely with your family, in an industry that could possibly define the character and nature of those family members. However, to survive the long-haul, family businesses must ensure that they adopt formal policy and strategy on employment, promotion, growth and investment interests. In that way they can ensure that the business continues to be passed from one generation to the next.

Tips for Mergers and Acquisitions

In the event that there are no family members to pass the business on to, or the next generation are uninterested, uneducated or unavailable, the inevitable decision to merge with another business or to sell your business on may have to be made. Or, it could be the case that you want to increase your stronghold in your industry or expand your business to include more family members and you want to acquire another company. In general terms, more than 50 percent of mergers and acquisitions fail and more than 80 percent fail to enhance shareholder value. Let’s review some ideas on the best way to ensure the upcoming change in your business is a positive one.

There is more than just one way to merge, or acquire. Depending on the unique characteristics of your business and the business you are about to engage with, you may want to consider the following:

A buys B
B buys A
A trades shares in A for shares in B
B as above
C is created and shares provided to shareholders in A & B

In all cases, there are a few points to consider and taking note of these before you take the plunge can help you avoid the pitfalls of a joining of enterprises.

What are your motives?
Growing the business for the good of your family is a wonderful motive for merging with or acquiring another business. Selling your business due to lack of interest or lack of family personnel to take over is also a solid reason. However, be honest with yourself. Is it a good time to make this change? What is the economic climate at present? Would it be a better choice to wait a few years to grow, instead of buckling to family pressure right now? If you need to delay due to a difficult market you could ask your children to take some more time to invest in their education or experience. Making a rash choice due to family concerns is not business-savvy. If facing a merger or acquisition your role in the organisation may change entirely, so you need to be clear with yourself what you expect and what you want to get out of the new union.

“We saw the industry changing and knew we’d have to make an investment in order to stay ahead of the curve. But making such an investment at our age had us asking ‘when will we see the return?’ The time was right personally and professionally.” Dean Foster, Executive Strategic Consultant, Dwellworks

You’re building something entirely new
Building your company from scratch is something sole proprietors should be proud of. You are used to making the decisions entirely on your own and taking sole responsibility for them. Taking on a new company with a history and operational structure of its own is a big task and getting two teams of people to work together and accept the new leadership structure takes some planning. You can consider the following to pre-empt any difficulties that may arise:

• From the get-go clearly define your new role: and the role of each member of the executive team. Clarity is crucial in the early days as this will prevent any niggling concerns and enable the team to focus on the big picture.
• Be exact about the new leadership structure: as you now command a larger team than previously, ensuring a representative from each area of the new business is involved in the integration of the two entities encourages cohesion and constant communication amongst team members.
• Pre-empt concerns: more people in the staffing structure means more feedback and possible complaint about decisions that need to be made. Being mindful of the reasons behind taking the chosen course of action and being able to readily explain them can take the sting out of criticism during the changeover.

“I was keen for Patrick [Oman] to stick around for a while and he was keen to stay too, but you have to lay out the ground rules of how that relationship is going to continue. There has to be clarity of roles.” Dan Sennet, Managing Director, Irish Relocation Services

Be real
It’s all about the integration of the two businesses. When those involved are too distracted by the completion date and possible payouts, the new entity itself loses focus and can fail right from the start. It can be a lengthy and sometimes dull process when ironing out the logistics of the deal, however losing sight of what the two business are going to become once joined is quite dangerous. Be clear with your staff, ensure they have no unreal expectations of how much better (or worse) the new working structure is going to be, and be honest – some questions they have may not be able to be answered for a while.

Preparation for change
Those staff employed in family run businesses (be it family members or non-family members) are used to a particular way of working. Just like a family, with its traditions and preferences for let’s say, a particular supplier or a brand of soap in the bathroom, a family business can become accustomed to a particular way of operating. When change occurs, this can be confronting for both family and staff members. Getting together with the leadership team and realistically setting out possible risks and downsides to the upcoming deal ensures you’re not caught out when having to face emotional responses to change. Have a plan and you will find those tricky moments are settled more quickly than you expect.

On the same page
Making sure not only the leadership team, but also the staff themselves are on the same page is crucial to what happens after the deal has been done. You have to look ahead to after the dust has settled and agree on common goals for the future of the business. Success is more easily achieved when everyone involved is aware of what needs to be accomplished. Set down some milestones and ways of measuring attainment of these goals. Short-term goals keep the energy levels up and push you onwards towards the long-term goals.

Find out more about what the EuRA panel had to say on their personal experiences in merging and acquiring their various companies by visiting the EuRA YouTube channel.

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Each region of Belgium has different rules about renting rooms under P2P arrangements, for example in Flanders, even private accommodation providers have to have an authorisation, which may only be granted after inspection, and the property has to meet much the same requirements as for domestic rentals e.g. smoke detectors. The Cabinet of the Premier of Brussels, responsible for Tourism, Rudi Vervoort, enforced on the spot checks in the Brussels region late last year to ensure that standards were being met. Further to this, Brussels region hosts are now also required to register with the Brussels Economy and Employment service. In Flanders business operators will be required to register online with the General Tourism Commission, CGT.

What knock-on effect do these new “tourist accommodation” regulations have for the short-stay market in Brussels? We spoke to Joël Vanmellaert, Managing Director of BBF Serviced Apartments to hear what impact these rules have on the industry and how it may affect the consumer.

First of all, the registration procedure is incredibly complicated. AirBnB have already complained that the regulations are too complex. At the beginning of the year an estimated 2,000 of the 7,000 people offering accommodation had registered their status with their municipality. The impact of this is that the supply will likely dwindle. When supply decreases, the only outcome is an increase in price of accommodation – not good for the consumer.

Secondly, when the “landlord” or owner is being asked to pay tax on their earnings, the one who suffers is of course the end-user, who sees an increase in price, despite the fact that a private let rarely offers the same level of quality that professionally managed accommodation does. And although the newly minted ‘summer agreement’ states that working persons can now earn up to €500 per month untaxed, someone with a nice room on offer can quickly surpass that amount, which means they will have to pay these taxes anyway.

Thirdly, and not at regional level but at local municipal level: there are also municipal taxes to be paid on furnished rentals. Any landlord renting out their property as furnished must register this with the municipality and pay tax accordingly. For example, in Sint Gilles the tax on a furnished accommodation is set at €200 per year. Of course, this is ultimately paid for by the tenant.

The regulations enforced that the beginning of the year will come under review after the initial implementation period, however how will the industry deal with the changes in the meantime? Will this see a welcome resurgence in hotel stays as opposed to internet P2P bookings? Only time will tell.

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The idea of “work” and “working spaces” is changing rapidly, and a business needs to keep abreast of what attracts new staff and what keeps them content to ensure their business stays afloat. ReLocate brings you an amalgamation of two reports, both entailing information crucial to the attraction and retention of staff. The first report being a survey on students and young professional expats by BNP Paribas Fortis, understanding the motivations behind their want or need to relocate based on their job prospects gives businesses an insight on how to position themselves to attract the best staff. The second report is a Global Talent Trends Study from Mercer, an innovative group that uses analysis and insights as catalysts for change within organisations. Their report details the steps employers need to take to ensure they are retaining the best employees and explains how we are moving forward into an era of fierce competition between businesses for talent like we’ve never seen before.

Looking back: what motivates students and young professional expats to relocate?  – BNP Paribas Fortis

Understanding what motivates students and young professionals to up sticks and move their whole lives to another country is key in attracting the best talent. Knowing what the driving factors behind their decisions are enables companies to put in place the most effective recruitment campaigns and attractive employment policies. “Millennials are the driving force behind this contemporary intra-European mobility, with more and more young expats in Europe seeking new academic and professional experiences elsewhere,” states Salvatore Orlando, Head of Expatriates at BNP Paribas Fortis. Despite big changes in UK and American approaches to immigration these past months, the professional market in Europe is still open to vast levels of mobility. The survey was executed by the Think Young think tank, founded in 2007 and focuses entirely on young people, providing decision makers with high quality research on key issues affecting millennials.

MOTIVATION TO RELOCATE – MOST SPECIFICALLY TO BELGIUM
Students
Just over half of students polled stated that the main reason for leaving their home country and relocating to Belgium was dependent on the opportunity offered by university or school in their home country. A further 39% cited experiencing another culture was enough for them to want to leave home. Learning a new language or developing existing language skills was the key factor in motivating 39% of those who responded. The final outstanding motivating factor in students deciding to relocate to Belgium was that they felt that the move would have a positive impact on their CV and would then in turn maximise their career opportunities.

Young Professionals
The results of this survey on young professionals are much more defined, with a massive 80% of respondents stating that the move to Belgium was wholly based on the career opportunities here. Half of those surveyed cite personal development as a driving factor in their decision to move. While motivations such as learning another language, the standard of living or quality of life and indeed even financial reasons are way further down on the list. Andrea Gerosa, founder of ThinkYoung sees the clarity in the results: “It’s a meaningful move, driven not by the desire to have fun but by the willingness to learn more, improve skills, and enhance career opportunities.”

What does this mean for employers and educational institutions?
Employers and educational institutions have the hard task of pre-empting students and young professional’s career aspirations, and ensuring that they provide clear opportunities for career progression.

Educational institutions need to ensure that the courses they offer contain the latest curriculum developments, and that these are transferable should their students wish to change track – as students often do. Universities and colleges should do their best to attract the best teaching staff that employ modern teaching methods that are also tried and tested. It is also important to offer a wide variety of extra-curricular programmes where students can employ their talents in a more practical environment, gaining them valuable experience for their future in the workforce. Scholarships also ensure that students from a wide variety of backgrounds are given the opportunity to learn, providing the learning environment with a variety of opinions and perspectives.

Employers can use this information to entice the best young professionals to their organisation. Providing potential young employees with clear paths of career progression through well thought-out organisational structures, allows each employee the chance to climb the ladder or explore other areas of the business. Progression isn’t always up, it can be left or right, and when employers offer flexibility, such as secondments to other departments, or other locations – this can be the deciding factor for a young professional full of enthusiasm.

Looking forward: what practices can we put in place to retain the best talent? – Mercer

There’s no denying that 2016 was a trying year in more than one area. With the uncertainty faced by the Brexit vote, the big change in American politics and constant conflict in the Middle East it is crucial that companies shift their focus onto their workforce, to care for the health and wellbeing of their staff. Technological advancements are also having a massive impact on the workplace, how we work, where we work and how we can balance that with enough “down time” are all changing our view of the world of work. On top of all this, Mercer reports that 92% of employers expect an increase in the competition for talent this year.

According to Mercer, these are the top six ways in which they feel companies are going to respond to these new challenges:
1. Attracting top talent externally
2. Developing leaders for succession
3. Identifying high potentials
4. Building skills across the workforce
5. Supporting employees’ career growth
6. Increasing employee engagement

FOUR TRENDS TO WATCH FOR IN 2017
1. Growth by design
It’s all about transforming the internal structure of organisations and ensuring that the “people agenda” is not overlooked. In Mercer’s Global Talent Trends Study they state that 93% of organisations are geared up for a reorganisation in the next two years. Those who aren’t already in the throes of redesign may be left behind.

2. A shift in what we value
If an employee feels undervalued, it is likely that their output will decrease and they will eventually look elsewhere when deciding upon their professional future. Mercer’s study reports that 97% of employees want to be recognized and rewarded for a wide range of professional contributions, not just sales targets or financial results. The rewards employees are seeking are not just fair and competitive compensation, they want more flexible work options, they want opportunities to get promoted, they want leaders who set clear direction, as well as peers that will challenge them and help set the tone for the future of the company. Knowing how to reward employees is key to holding on to them.

3. A workplace for me
When an employee feels that they are not just a number, they are more likely to produce work of a higher quality and also more likely to stay within your organisation. Being able to personalise your employees’ experience will bring significant advantages to your output and staff retention levels. One way for your employees to personalise their working experience is to introduce flexible working options. Mercer’s study showed that the majority of employees want more flexibility within their roles, however not all organisations are as flexible as their employees would like. 1 in 3 employees indicated that they had requested a flexible work arrangement in the past, however they were turned down. Further to this, 1 in 2 employees expressed some concern that working part-time or remotely would negatively impact their promotion opportunities. There is clearly more work to be done here.

4. The quest for insight
Companies are collecting more data from both candidates and employees than ever before, Mercer questions how this data can be better used to gain actionable insights – we don’t seem to be using the data to the best of its abilities. Mercer states that even though many organisations around the globe are collecting data, very few are able to translate the data into predictive insights. Just 1 in 4 are able to produce basic descriptive reporting and historical trend analysis. Looking forwards, predictive analytics – such as identifying which employees are likely to leave – would be incredibly valuable however less than 35% of HR leaders are able to provide this information.

It is an exciting time for the employment market. Organisations are redefining and redesigning their internal structures and the results will eventually be a complete overhaul of employment and work in general as we know it. Concurrently, employees are demanding more of their employers and the more vocal they are the better. The more transparent employment processes are employees can be assured of a better fit within the organisation and employers will then benefit from loyal, happy, engaged and steady employees. Workplaces are becoming not just a place where we feel obliged to show up to within certain timeframes, they are morphing into fluid and flexible spaces where our talents are nurtured, our contributions are valued and we work together towards a future that we are all content to be a part of.

TOP TIPS TO WIN THE TALENT WAR
• Promote a contribution culture where everyone feels welcome to give input;
• Focus on the “whole person agenda”, including health and wealth benefits;
• Define exciting career paths for a positive impact on retention;
• Take a chance on non-traditional talent who have potential but not experience;
• Mitigate risk by building a diverse port-folio of skills and a culture of innovation;
• Create a sense of belonging that resonates with your diverse workforce.

Read the full reports:
BNP Expat Survey
Mercer Talent Trends

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