Transform to build trust: Prioritising employees

1. Communicate the company’s purpose and values. Family businesses believe they know what they stand for—79% say they have a clear purpose—but they do not make this the focus of their communications. Though 61% say their company purpose is communicated internally, only 46% write it down or publish it on their website. The business’s values should be front and centre, set out clearly on the website and on all external and internal communications. Regular reporting should reinforce what the company is doing to demonstrate those values. An even more important priority is aligning the company’s appraisal and reward system with the company’s values and purpose. More than half of the survey’s respondents do not do this.

Family businesses have traditionally shunned the limelight, but more are beginning to open up about how they operate and what they stand for. Recently, Thomas Brenninkmeijer, a fifth-generation member of the family that owns the major clothing retailer Cofra, told the Financial Times in a wide-ranging interview, ‘The important thing is that we attract around us a very large group of extraordinarily talented non-family members who have the exact same passion and view of the world and society.’

At Grupo HD Covalco, a leading supermarket chain in Spain, communicating with employees has become a goal in itself. ‘Everyone in our team understands who we are, what we do and why we do it,’ says Josep Saperas Aymar, the director general of the 93-year-old company and the grandson of the founder. ‘You communicate by example, not just words.’

2. Deliver on non-financial goals and values. Family businesses should be transparent about the progress they’re making on non-financial goals. There is strong evidence that employees want their employers to show commitment to ESG issues, and to be more transparent about their ESG activities. In PwC’s 2022 Global Workforce Hopes and Fear Survey, 53% of the 52,000 workers who responded said it’s important that their employer be transparent about the company’s impact on the environment, and 54% said it’s very important that their employer be transparent about its record on DEI. Yet only 37% of family businesses regularly communicate how they are performing against these types of non-financial commitments.

In our survey, only 34% of respondents said there was a person responsible for DEI, and only 43% had an ESG leader. If companies are serious about these issues, they need to appoint senior leaders who are responsible for making progress in these areas and reporting on that progress.

At W.L. Gore & Associates, the US family-run business that invented Gore-Tex, founders Bill and Vieve Gore were determined to create a company with diversity at its heart. ‘I dreamed of an enterprise with great opportunity for all who would join it, a virile organisation that would foster self-fulfilment and which would multiply the capabilities of the individuals comprising it beyond their sum,’ said Bill Gore in 1961. In 2022, the company, which has revenues of US$3.8 billion, earned a rating of 95 out of 100 in the Corporate Equality Index, which measures organisational policies and practices related to LGBTQ+ workplace equality. ‘Our associates are what differentiate us,’ says the company’s diversity statement. ‘Diversity and inclusion are critical ingredients for sustaining an engaging working environment.’

3. Create opportunities for development and upskilling. Findings from PwC’s Future of Work and Skills Survey show that companies that actively create opportunities for their employees to build skills achieve more consistent results, have greater earnings resilience, and demonstrate a superior ability to attract and retain talent. Yet, less than half of the 54,000 workers surveyed in PwC’s 2023 Global Workforce Hopes and Fears Survey said their employers provide them with the opportunities to apply the skills that they think will be most important to their careers in the next five years. And although two-thirds of employees in that survey said they are confident their company would support upskilling, that still leaves one in three who are not.

The message: be clear about upskilling opportunities, and create clear pathways for advancement within the firm. These formal mechanisms will deepen employee trust. Germany’s Freudenberg Group, for example, hires senior management from the ranks of its organisation whenever possible, rather than making external hires. ‘When you talk of trust, you also have to talk of the relationships it’s built on,’ says Ralf Krieger, who sits on the group’s board of management. ‘That starts at the first interview and is built over the years.’

4. Listen to your people. Creating a culture in which employees can voice their opinions and concerns, knowing they will be taken seriously, builds trust. For the companies employing the 61% of respondents in the 11^th Global Family Business Survey who said their workplace lacks a system for reporting misbehaviour, the remedy is relatively simple: introduce a formal, secure mechanism to report incidents, making sure that credible reports are acted on. Many companies, for example, have a dedicated whistle-blower hotline. Companies should also have a process in place for employees to appeal management decisions.

One stumbling block is a perception gap between employers and employees when it comes to speaking up. PwC’s 2023 Global CEO Survey of more than 4,400 leaders worldwide found that 56% of CEOs believe their managers encourage dissent and debate. And yet, 63% of employees polled in PwC’s 2023 Global Workforce Hopes and Fears Survey said their bosses rarely encourage them to speak their mind.

To their credit, the leaders participating in the 11^th Global Family Business Survey seem to be aware of their own shortcomings in this regard: 78% of them admitted that they aren’t very advanced in the area of enabling employees to appeal management decisions. The solution, however, may be more complicated than simply introducing a hotline; it will require creating a stronger culture of empowerment among rank-and-file workers. Empowering employees by giving them autonomy to make decisions will help bridge the trust gap. Culture should never be an afterthought in workforce strategy.

As noted in our overview of the survey findings, the trust advantage for family businesses is narrowing. The 2023 Edelman Trust Barometer notes that a decade ago, family businesses’ trust score was 20 percentage points higher than non–family businesses’; today, the margin is just six points. Winning the trust of employees—by improving communications, delivering on ESG and DEI, creating development and upskilling opportunities, and empowering workers to speak up—will go a long way to regaining that trust premium.