Do family firms have more loyal employees?

Having once worked for a family owned business I was intrigued by the headlines about family firms having happier or more satisfied employees than other forms of enterprise.

When I read more on the research carried out by Stanley Siebert, a professor of labour economics at the University of Birmingham, it seemed to be measuring loyalty – but perhaps loyal employees are happier and more satisfied.

Anyway the survey of 20,00 employees in over 2,000 companies found that 28% of employees strongly agreed that they felt loyal compared with 22% in other organisations and 26% felt they had job security compared with 20% elsewhere.

This is apparently statistically significant. So whilst the figures are higher for family firms it’s still not a very encouraging picture overall is it? And doesn’t it also mean that 62% didn’t feel very loyal and 74% felt they didn’t have job security? 

So the headlines could have read: “Fewer than 1/3 of employees in family firms feel loyal”. And why should this be?

According to the survey staff employed in family firms:

  • have less job security and little protection from redundancies (only 7% of these companies have “no redundancy” policies)
  • work almost a day longer (5.5 hours) each week than employees in the public and private sectors (who average just under 33 hours a week)
  • aren’t paid any more than employees working elsewhere
  • have no or little Trades Union support (only 3% membership compared with 33% in private sector and 50% in public sector)
  • don’t receive much formal training (it’s mostly on-the-job)

Despite this the report claims that staff in family owned business are proud to say who they work for, feel more valued, are closer to the decision-making, and share the values of the company.

These companies are reported to have inclusive management practices and encourage the expectation of long-term employment (but don’t guarantee it – and job tenure is actually shorter than elsewhere).

Research at Warwick University demonstrated that happy workers are more productive so if companies can get employees better aligned with the company’s goals they will probably get more discretionary effort from them ie they will go the extra mile.

But note these are not your typical SMEs. The report was commissioned by the Unquoted Companies Group which includes companies such as Clarks shoes and JCB. Doubtless these are reputable companies but the group has lobbied parliament in the past opposing the growth of EU employment protection legislation and the working time directive.

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