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Welcome Welcome to KPMG Family Business feature articles. If you would like to discuss these articles or how KPMG can help with your business please feel free to contact me on 8865 6117 or pwakim@kpmg.com.au

Why diversity matt ers in FBs

 RICHARD COOPER

WHEN it comes to a family business’ long-term sustainability, diversity is important, according to KPMG’s 2021 Australia Family Business Survey Transition, Diversity and Entrepreneurship.

Th e complexity of the family business system places a great strain on the leaders of those businesses. It requires an understanding of a whole range of issues and concerns, where what’s right for the business needs to be continually balanced against what’s right for the family.

Th is is where the benefi t of diversity at the leadership level and across the business plays a key role in helping to sustain longterm success.

Diversity, which seeks to be inclusive, captures the intrinsic characteristics of diff ering gender, generational and cultural beliefs. Diversity in family business can off er a greater pool of talent for leadership roles and improve decision-making quality due to the diff erent perspectives off ered.

Diversity, and the diff erent perspectives it off ers, is important to acknowledge and harness in the process of leadership transition. Being open to the ideas of family members that are in position to take over leadership at the early stages of the process is vital to enabling a smooth transition.

Need to seek out views and opinions

Being willing to listen to the advice of others that have gone through their own process of transition is infi nitely valuable as many who have appointed independent directors to their board would att est.

However, realising the benefi ts of diversity requires more than simply having someone diff erent to you on the board – it means actively seeking out their views and opinions.

Having an independent Board of Directors is a good thing but if all that happens is ‘passive’ agreement with “whatever they said”, then the benefi t of bringing together people with diff erent experience, backgrounds and beliefs can be lost.

Th rough discussions with other family businesses, we uncovered a number of ways you can ensure diverse views are properly heard and encouraged.

Many created forums designed to allow people to share perspectives such as family councils, family advisory boards and next generation sub-committ ees. Several were also taking active steps to ensure that the blockages to participation were removed by, for example, introducing fl exible work arrangements for young parents and other care givers.

Others were purposefully bringing in new skills and expertise, either through recruitment or education, where the family had identifi ed those skills would be needed at some point in the future.

Diversity of thought and opinion is critical to building a sustainable business. A family business would be leaving ‘money on the table’ if it chose to ignore the experience and skills of the family as a whole, not just those who may be most eligible by virtue of age or gender.

What is diversitty?

Diversity, which seeks to be inclusive, captures the intrinsic characteristics ofdiffering gender, generational and cultural beliefs.

First published on KPMG.com.au by Richard Cooper, Associate Director, Enterprise, KPMG Australia.

TAKING STEPS TO MANAGE TRA NSITION Howtoachievecontrol How to achieve control overtheoutcomes over the outcomes

 AGNES VACCA

PLANNING for a future outside of work is something we’ll all need to do eventually, but the binary concept of moving from employed to retired is not as simple or straightforward for business owners.

Complicated by a number of factors, some fi nancial, but many, emotional and social, a business owner leaves not just a role but a way of life, and many will need to separate their identity from the business they’ve built to make room for a transition.

Th ere is much at stake through the process of transitioning leadership, including the value created from years of hard work and the future of stakeholders integral to the business’ success – your family, employees and customers. But less than 47 percent of family businesses have turned their mind to planning for a transition.

Primarily, many feel that they are not ready for retirement – there is no legislated or normalised age at which an entrepreneur should step aside. However, that’s the not the only reason family businesses fall behind in planning succession. Others include: • A need to be able to feel secure in their own, and their family’s future • A sense of losing control and not being able to manage their own destiny • Dealing with unfinished business.

Managing these feelings takes time, and many fail to develop the mindset necessary for the transition to occur. In order to secure the future of their business, owners need to deal with and react to change, and pivot accordingly – skills that are critical to entrepreneurship.

For business owners to best anticipate change and plan for transition, they should consider: 1. Being an active participant. Treat change and transition not as something that happens to you but something that you can own and control. Being able to remain the key decision maker in the manner and means by which your own transition occurs increases confidence in the transition process. 2. Becoming a gardener. At some point, what you’ve created has grown into something with its own life. How can you nurture new growth? 3. Becoming a great coach. Accept that all players have to retire some

time and many become better coaches than players. Experience accumulates with age, converting that experience to knowledge empowers family business leaders to become great coaches. 4. Helping explain ‘why’. Assist in instilling a purpose for the organisation and, by implication, help future generations to carry on your legacy. Successful businesses run smoothly – everyone knows what the business does and how it does it. Family businesses that last for generations also know the why and being around to help emphasise what that means can be integral to future success. 5. Being available but not visible. At some point, you need to have the presence to not be present. Any transition will inevitably have new people playing senior roles, and you’ll need to work out how to be there without being seen. Your successors will benefit in the confidence knowing you have moved on, yet are still around if needed.

By deliberately thinking about your, and your business’ future now, you can take the fi rst steps towards transition.

Change might not be easy but being the change is easier than being changed.

First published on KPMG.com.au by Agnes Vacca, Partner, Geographical Lead – WA, Enterprise, KPMG Australia.

Fall in employment accelerates as lockdowns continue

 JODIE PATRON

THE unemployment rate continues to fall, now sitting at 4.5% seasonally adjusted, the lowest since November 2008. But this headline disguises the true story, which is a fall in employment of 146,000 people.

Th e problem is that people are exiting the labour market – 170,000 of them during August in the ABS labour force fi gures released today. Th at is, they are no longer employed or seeking work.

As well as a falling participation rate, underemployment remains a real problem. Th is rose in August, meaning that many of those remaining in the labour force are not working as much as they would like.

Another worrying issue is that the premise of JobKeeper was to keep employees connected with their workplace so that when the recovery came it would be relatively seamless, allowing a quick regeneration of business activity.

Th e concern now must be that – given the falling workplace participation rates we are seeing, and the length of time lockdowns are taking – whether that connection has been permanently damaged and will it hinder the recovery.

Th e eastern states’ ongoing lockdowns are the key to both participation rate and underemployment. Th e July fi gures gave us a taste of the start of the NSW lockdown, but today’s data refl ects the full extent of the problem in NSW and the new lockdowns in Victoria, ACT and Queensland.

In NSW, the fi rst two weeks in August alone saw another 173,000 reduction in employment in the state, with a similar number of people leaving the labour market. Th is followed the 36,000 fewer people employed in July.

Queensland also saw a fall in employment of 30,000 jobs, while there was an increase in employment across Victoria (of 29,000 jobs, with the latest lockdowns yet to be fully captured in the data) and Western Australia (of 12,000 jobs).

Th e August data shows total hours worked across Australia fell by 3.7 percent or 66 million hours, seasonally adjusted. NSW hours fell by 34.9 million – bringing hours worked in the state to below its April 2020 low.

Victoria saw a fall in its monthly hours worked of 16 million, refl ecting the start of its latest lockdowns, while Queensland’s fell by 19 million hours. Th ere were some modest increases in hours worked in South Australia and Western Australia.

Across the nation, the underemployment rate has increased again by 1.0 percentage point to 9.3%, albeit still below the highs observed between April and October last year. Of this, NSW, Victoria, QLD and the ACT all saw increases of between 0.7 and 1.0 percentage points in their underemployment rates.

Over August, more than 1.8 million people indicated that they worked fewer hours than usual as a result of ‘No work, not enough work available, stood down’, or for other reasons not related to leave, standard arrangements, or bad weather. 760,000 of these were in NSW, 550,000 in Victoria and 360,000 in Queensland.

It is clear that lockdowns have a signifi cant impact on the labour market. Until the economy can more fully open, employment, participation in the labour market and underemployment fi gures will continue to record ups and downs across all the states and territories.

Overall summary

• There were 146,000 fewer people employed across Australia. Lockdowns are a key driver of this fall, with NSW and ACT the only state/territories to have fewer people employed currently compared to pre-pandemic March 2020. • For those still in the labour force, there was a significant reduction in hours worked, with 1.3 million people reported as underemployed, or 9.3 percent of the labour force. • Across the nation, there were 77,000 fewer males employed and 69,000 fewer females employed, indicating a more even impact this month compared to the initial lockdown figures in July.

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