Running A Family Business In Ireland: Challenges And Benefits
Introduction
Throughout my assignment for Family Business, I will address the different challenges and problems as well as the benefits of running a family business in Ireland. I will be relating each one back to Irish family run business that I have chosen. Each challenge and reward will include both a positive and negative aspect along with my opinion on it. I have chosen to base my assignment on J.J. Kavanagh & Sons Ltd a family business which I admire. JJ Kavanagh and Sons is a solely family owned company providing passenger transport and coach hire in both Ireland and in the UK. It was first set up in county Kilkenny, in 1919, by James and Mollie Kavanagh. Throughout the years, they have acquired other transport companies, set up, in populated locations across Ireland and the UK. This company has spanned across four generations of the Kavanagh family and this year marks their 100th year anniversary in business.
Challenges/Problems
1. Succession Planning
Regardless of industry, implementing an effective succession plan is a challenge faced by all family businesses in Ireland. Succession Planning can be defined as “the systematic process of recognizing and creating future leaders who are able to take the position of the old ones when they leave the organization…”. J.J. Kavanagh and Sons Ltd has been passed down to three generations, with two successors currently holding the leadership reins. Mathew Kavanagh, the son of James and Mollie, passed away in 1986 and his sons Paul and JJ became the Joint Directors of the company. Together they have been running the company for the past thirty-three years and have yet to choose their successor(s). The company is likely to be passed down to the next generation of the Kavanagh family.
The difficultly here for Paul and JJ is choosing the best suited person(s) for the job and grooming them for leadership, especially when all the candidates for succession are related to them. To prevent jealousy or rivalry amongst siblings’ and cousins of the next generation decisions effecting the future of the company, such as choosing the successor(s), should be clearly communicated. This type of “...communication should begin when the founders are still in control” (Wagner, 2019). This will have a positive effect on the company, helping to ensure that everyone remains content within their roles when the successor takes control. Succession planning can also have a negative impact on the company, as it is difficult to know the right time to retire. If the chosen successor is called upon too soon, they may not be equipped to handle leadership. If it's too late they may have lost their passion for the business. This could put the business at risk rather than choosing a non-family member to lead. In my opinion, succession planning is a major challenge facing J.J. Kavanagh & Sons and it requires careful consideration from Paul and JJ.
2. Personal & Business Life
A challenge facing any family business is when personal and professional lives begin to merge with one another. People each have their own preferred way of working and, due to this, disagreements are unavoidable. These differences in opinion can sometimes be of benefit to the company, providing multiple options and solutions from family members. This can help ensure all major decisions are in the company’s best interest. J.J. Kavanagh & Sons currently has joint directors, meaning that both JJ and Paul have an equal say in the decisions of the company. For their business relationship to be effective and their personal lives to remain intact, they must set out specific boundaries between themselves. To do this, each family member involved should sit down and “…draw a line between what’s acceptable and unacceptable…state these boundaries clearly, note them often, adhere to them (even when you wish they weren’t there) and change them when they become too rigid” (Kolbe and Bruske, 2019).
However, it can also have a negative impact on relationships of family members. There are many aspects of family life that can cause family members to behave in an unprofessionally in the workplace. Behaviour such as joking can undermine the authority of a leader, especially in cases such as JJ Kavanagh & Sons where non-family members are also employed by the company. Employees, who witness this behaviour, may decide to take a more relaxed view to their roles and responsibilities, threatening the efficiency of the company. In my opinion this is a constant challenge facing the company as it threatens the personal and business relationships of the Kavanagh family. In my opinion, the best solution to this challenge is separating business and family life to protect the relationship between family members.
3. The implications of Brexit
A major challenge facing J.J. Kavanagh & Sons, who operate in the UK, is the uncertainty surrounding the United Kingdoms’ upcoming departure of the European Union. Although the two-year departure period ended on the 29th of March 2019, the UK remains part of the EU. Due to unfavourable Brexit deals, the departure has been postponed twice, currently planned for the 31st of January 2019. There are negative aspects of Brexit such as the possibility of future changes to the corporation and in both UK and Ireland. As J.J. Kavanagh & Sons is a limited liability company, they may face an increase in the percentage of UK corporation tax, which currently stands at ‘19%’ (1). After Brexit, Ireland will lose its closest ally in its efforts to keep corporation taxes at ‘12.5%’ (1), the second lowest in the EU. An increase in either the Irish or UK corporation tax would diminish the profits of J.J. Kavanagh and Sons, slowing down opportunities for expansion. However, Brexit may also have a positive outcome for J.J. Kavanagh & Sons. Companies based in UK that wish to continue availing of the EU single market may move to Ireland, attracting more people to live in Ireland, increasing the market for transport. In my opinion, Brexit is possibly one of the biggest challenges facing J.J. Kavanagh and Sons, simply because the outcome of Brexit is unknown, which limits their methods of preparing for it.
Rewards
1. Next generation minds
In family businesses, such as J.J. Kavanagh, the ideas and opinions of the next generation are more likely to be valued and considered than in a normal company. These young generations grow up surrounded by all aspects of the company before leaving to third level education or other work experience. They eventually return to the company with fresh ideas and knowledge from the modern workplace, revitalising the company, increasing the job satisfaction of younger members of the family. “A smart family business keeps its edge naturally when it brings in the next generation”. J.J. Kavanagh & Sons adapted to an increasing use of technology by building an e-commerce website where their customers can book and pay for their tickets online.
The company have also recently announced the release of a new “contactless card option” (JJ Kavanagh, 2019), allowing their customers to quickly board a bus, and track and pay for their journeys online. These next generation ideas improve the customer experience and ensures that the family company remains competitive. However, this may also have negative impacts on the company. According to the Central Statistics Office only “...48%...” of people aged between “...60 to 74 years...” make use of the internet. Therefore, a complete switch over to technology-based payments may result in a loss in their senior customers. In my opinion, this a reward that is very beneficial to the company. I believe it keeps their company competitive and up to date with modern payment methods.
2. Committed and united workforce
A common goal for all members of the family involved in the business is its success, mainly because they have invested so much in the company. This “deep commitment often makes family companies resilient, even when business is slow and finances are tight” (Burks, 2019). One of the reasons for the success of J.J. Kavanagh & Sons can be attributed to the time and money invested by four generations of the Kavanagh family. Their willingness to remain loyal to their company during the recession of 2008 which closed almost “...15% of Irish businesses...” rather than emigrating to better economies proves to have be a positive outcome of their workforce. A negative aspect of this family-based commitment during harsh economic times may result in certain members taking on a greater workload than they can handle. “Overwork has been found to be the number one cause for work-related health disorders like stress, fatigue and exhaustion'. In my opinion, the committed family workforce provides J.J. Kavanagh with a competitive advantage over non-family companies.
3. Employee relations
Relationships between workers in a family business lack the office politics found in normal companies, creating a friendly work atmosphere for the family. The fact that the some of the workers are related to directors of J.J. Kavanagh and Sons, gives them the confidence to speak up about concerning issues regarding the company. This sense of belonging and responsibility has positive effects across different tiers of the company makes way for a proactive method of dealing with issues, improving the efficiency of the family business. “Families also may place importance on each member's personal needs despite their business commitments” (Burks, 2019). This way of working creates an environment where workers feel accepted and can rely on others. It also increases the job satisfaction of employees, which in turn has a domino effect on increases the company’s efficiency. Paul and JJ are brothers who hold the position of joint directors, allowing them to depend on each other and carry the workload. However, the lack of office politics can undermine the authority of non-family members in the chain of command. They may feel that their position doesn’t hold the same authority as their subordinates, simply because they are not related to the directors. In my opinion this is a reward that carries equal positive and negative effects for the company, it creates a friendly atmosphere but at the risk of disrupting the chain of command.
Conclusion
In this assignment I have addressed some of the challenges, problems and rewards facing J.J. Kavanagh as a family business in Ireland. After conducting my research on the company, I have concluded that the implementation of an effective succession plan, separating the personal and business lives of family members and the confusion surrounding Brexit, were the company’s main challenges. I have also come to the realisation that the family’s younger generations, the family-based workforce and the relationship amongst workers are the greatest rewards for this company.
