Although nearly two thirds of the next generation of Thai family business leaders (NextGen) see business growth as a key priority, adopting new technology to upskill digital capabilities is equally vital, according to PwC's Global NextGen Survey 2022 - Thailand Report.
Succession plans for family businesses may have been halted by COVID-19 but the pandemic has also encouraged the current and future generation of leaders to band together tighter than ever.
The second edition of the Thailand Report is part of PwC's Global NextGen Survey 2022, the most extensive survey of the next generation of family business leaders that PwC has ever conducted. The survey's insights are the result of interviewing 1,036 family business leaders in 68 territories, including 40 respondents from Thailand.
Niphan Srisukhumbowornchai, Entrepreneurial and Private Business Leader and Tax Partner at PwC Thailand, said the survey found that COVID-19 made driving business growth a priority for NextGen leaders. Achieving business growth was a top priority for 63% of respondents, followed by expanding into new sectors or markets (50%).
"The current global situation makes it challenging for family businesses to survive across generations," Niphan said.
"Our survey shows that NextGen leaders are not only looking for ways to survive, but they also want to drive growth through the power of their mindset, digital capability and new skills. At the same, they want a balance between financial goals and responsibilities to society and environment," he said.
In addition to growth, digital upskilling of the workforce and the adoption of new technologies are key priorities for NextGen. This helps family businesses to step up organisational capabilities to better meet the demands of clients, while establishing a competitive edge.
The survey revealed that 35% of Thai NextGen are confident of their digital capabilities, higher than the 28% of current leaders who feel the same way. One in three (33%) of Thai NextGen believe the current leadership generation don't fully understand the digital opportunities and risks for their family business.
COVID-19 unites leaders across generations
A positive effect of the pandemic has been to increase intergenerational cooperation. The NextGen and current leaders are working more closely to solve problems and manage challenges facing their business.
Nearly half of Thai NextGen (45%) say they're now more committed to, and more involved with, the family business than before the COVID-19 outbreak. Communication between the generations about business affairs is stronger than before.
However, it's hard for current leaders to exit and let go of control with 57% of Thai respondents saying the current generation aren't ready to retire during the pandemic. Meanwhile 18% say the pandemic has slowed or delayed the family business succession plans, higher than their global peers at 12%.
"Although many Thai family businesses have succession plans and bring in NextGen members to be involved with development, the truth is that current leaders are hesitant to hand over all leadership roles in this challenging situation.
"However, that doesn't mean succession will not occur in the future. This is an opportunity for the NextGen to showcase their leadership skills and talent for driving business growth, earning trust from the current leaders," Niphan said.
NextGen are sustainability-oriented
Another side effect of COVID-19 is hastening the adoption and awareness of environmental, social and governance (ESG) practices among family businesses.
PwC's report found that over two thirds (68%) of Thai NextGen believe their family business has a responsibility to fight climate change, which is in line with their global peers at 71%. More than half say they will ensure sustainability is at the heart of their business practices in the future.
"It's a positive sign that Thai NextGen show a strong appetite for ESG impacts rather than focusing solely on profitability and shareholder returns. COVID-19 has transformed the expectations of society and stakeholders. This is a challenging time but a good opportunity for NextGen members to demonstrate their leadership skills by driving sustainable growth under ESG practices," Niphan said.
Source: PwC Thailand
