Family business is big business in Ireland. According to DCU’s National Centre for Family Business, about 75 per cent of Irish firms are family businesses, and they contribute more than 50 per cent of the country’s GDP, as well as about 50 per cent of employment.
But family businesses have their own set of complications, especially as the business grows. Much of this can stem from how family values and business values interact with one another throughout the life of the business.
“We’ve done some research around imprinting in family firms,” says Dr Eric Clinton, director of the National Centre for Family Business, DCU. Imprinting originally stemmed from avian biology and later moved to developmental psychology – the theory looks at the mechanisms through which basic values and behaviour are passed from one generation to the next.
“That theory has moved into the business world – we have looked at multigenerational family firms to see how behaviours and, fundamentally, values, have become imprinted. We found that this imprinting, and the generation of values, happens in what we refer to in the research as a sensitive period,” says Clinton.
“Sensitive periods happen in everyone’s personal life, examples could be the death of a parent, illness, or starting a new job – these periods inform how we behave in our lives. The same thing happens in a family business,” says Clinton.
A lot of the sensitive periods happen at the early stages of the business, but things happen in multigenerational family firms throughout generations which dictate the values the family stands for, he explains. “You could have a third-generation business which has to deal with a supply crisis, or industry decline, or indeed a non-family member coming into the business. These periods can very much change the orientation of the family when it comes to values.”
Established in Donegal in 1866, Magee is a family business whose well-known brand of design, weaving, and tailoring has sustained through five generations.
“I am the youngest of three siblings and we are now all in the family business working with Dad, so it is a real family feel,” says Rosy Temple, sales development manager at Magee.
‘Key values’
“We have key values that have remained a constant part of who we are for over 150 years, like a sense of honest integrity – to our suppliers, employees and customers. Alongside this comes our commitment to quality – in the sometimes fickle world of fashion, it is easy to succumb to a mantra of cheap, bad-quality clothing to drive volume. This has never been our style, we have always worked to bring long-lasting quality in everything we do,” says Temple.
A rich story of heritage and tradition often conveys an important message to customers – one of the reasons more family brands are on shelves is that there is a strong appetite for them.
“Just look at your local shops and you see that increasingly the family brand is coming to the fore. As a small nation, we have had many scandals regarding sourcing and traceability of product,” says Clinton. “In surveys of consumers, we want local, green, Irish products. These family firms are seeing the benefit of promoting their values to the customer. So family values can often have a beneficial impact on business values.”
“A crucial point is whether you are ‘family-first’ family-business, or a ‘business-first’ family business. The ones that are multigenerational will tend to have a ‘business-first’ approach,” says Clinton.
When it comes to multigenerational businesses like Magee, the business and family values work symbiotically. “I don’t think there is much of a distinction between our family and business values,” says Temple. “One of the benefits of working with family is that we are all on the same page when it comes to making sure that there is a successful family business to pass on to the next generation. There is an inherent understanding that longevity is hugely important – we are not about making a quick buck, but about making a sustainable future available for decades to come.”
Expanding the business
While the informality that can exist in the early stages of a family business can be helpful in encouraging the business to grow, formal structures of employment are useful when it comes to expanding the business across generations.
“Many of the successful multigenerational firms have worked hard on the ‘family’ side of things,” says Clinton. “That might be setting out policies for next-generation involvement – some family business may have a policy to say that in order to be involved, you must first work for five years outside the family business, or you must have a professional education in an area that can contribute to the family business. Often, the recruitment of family members must be done through a non-family board.”
In looking toward the next generation of Magee, that shift is already being considered as to how family and business values may be passed on. “The sixth generation are little children right now,” says Temple, “so we have no idea if they will join or not and will not be putting them under pressure to do so.
“We must plan for two situations, one where there is interest in joining, and one where there is not. We’d like to hope that some of them will, and in that event, it is up to us to have agreed on a clear succession plan which is well structured. Succession in any family business, be it a farm or clothing business, will never be straightforward, but the lack of a succession plan without knotty decisions clarified and made is a disaster waiting to happen. We can’t emphasise enough how important it is to tackle the future now.”