How Canadian family businesses compare globally: KPMG report

Five takeaways and some surprising results come from survey of more than 2,000 family business CEOs globally

Natalya Anderson, Financial Post  •  Financial Post
Published Jun 30, 2022  •  3 minute read
A younger man and woman sit at a table next to a woman with grey hair and glasses, with paperwork and a computer on the table in front of them. Secret to success includes giving equal importance to family and business results, while keeping the founder’s entrepreneurial spirit alive in successive generations.
Secret to success includes giving equal importance to family and business results, while keeping the founder’s entrepreneurial spirit alive in successive generations. GETTY IMAGES

A KPMG study released today looking at how Canadian family businesses compare with their global counterparts looked at factors like how authoritarian business leaders are, how entrepreneurial family enterprises are and where the female leaders are.

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The new report by KPMG Enterprise and the STEP Project Global Consortium, entitled The regenerative power of family businesses: Transgenerational entrepreneurship Global family business report, looked at data from 2,439 CEOs and other leaders from top family businesses across 70 countries and territories worldwide.

“We wanted to explore how family businesses are able to reinvent themselves, stay competitive and achieve multi-generational success, particularly coming out of a global pandemic,” said Mary Jo Fedy, Partner, National Enterprise Leader, KPMG in Canada, in a release.

“The study revealed how family business performance is tied to both financial and non-financial measures of success and that high performers give equal importance to family and business results, while keeping the founder’s entrepreneurial spirit alive and well in successive generations.”

Five key takeaways from the study:

1. Canadian “Next Gen” leaders are bigger risk takers who value family control

“Entrepreneurial risk-taking is typically more prevalent among younger Canadian CEOs, since they tend to be less risk averse and will pursue aggressive growth strategies in their quest to outperform the competition,” said Daniel Trimarchi, Director and National Leader, Family Dynamics & Governance, KPMG in Canada. “These leaders are more likely to adopt disruptive technologies and respond rapidly to industry changes or changes to the family’s needs.”

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According to the study, 54 per cent of Canadian family businesses identified a high level of risk-taking, compared to 25 per cent in Europe, 37 per cent in Asia Pacific, and the 40 per cent in the Americas.

2. Canadian family businesses are increasingly entrepreneurial

54 per cent of Canadian family businesses identified as highly entrepreneurial, compared to 27 per cent in Europe, 37 per cent in Asia Pacific, and 47 per cent in the Americas, the Middle East and Africa.

3. Innovation is not Canada’s strong suit when it comes to family businesses

A notable 40 per cent of Canadian family businesses described their innovativeness as low, while only 19 per cent identified as highly innovative. This compares with 29 per cent identifying as highly innovative in Europe, only 13 per cent in the Americas, 39 per cent in Asia Pacific and 37 per cent in the Mideast and Africa.

4. Maintaining family control and influence is a top priority for Canadian family businesses

Over half of respondents (53 per cent) said they believed that maintaining the family’s control and influence is the most predominant socio-economic wealth factor to improve performance, compared to 37 per cent who named identification with the family business, and 16 per cent who identified the family’s emotional attachment as driving factors.

5. Canada lags behind when it comes to promoting women

Globally, women are shockingly underrepresented in leadership positions, according to the study, with the global average showing 81 per cent of CEO roles occupied by men, and just 19 per cent occupied by women. Canada is underperforming in rectifying this issue, with only 10 per cent female CEOs and 90 per cent men.

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Other findings from the family business report

Readers may be surprised by how Canada compares in other areas, such as how many businesses the family operates (slightly more), how many generations are active in the business (about the same), which generation is operating the business (more in the second generation) and leadership style (less authoritarian than most areas, except Europe).

Practical actions to improve family business performance

The survey results indicate family businesses can take practical measures to strengthen their competitiveness and future-proof the enterprise.

“There are a number of immediate steps that a family business can take to improve performance,” says Mr. Trimarchi. “This could involve adopting the fresh ideas and digital know-how of ‘next gen’ entrepreneurs and strengthening the bonds between the family and the business – often by leveraging family capabilities. Putting a strong family governance framework in place can help manage family conflicts.”