Family Firms

How Shared Values and Knowledge Guide Construction Sector Success

In Canada, there are over 365 000 construction businesses, as of 2016. Of those 365 000, 99 percent have fewer than 99 employees and 61 percent have between one and four employees, according to the Government of Canada. While it’s unclear how many of those 365 000 are family-owned and operated, according to Business.com, “66 percent of all businesses in the world are family-owned and operated.” That’s almost a quarter million family-owned construction companies in Canada alone.

In an industry where it’s not uncommon to hear terms such as “and sons” and “bros.” in company names, it’s likely that an even greater percentage of construction businesses are family-owned. Why are family-owned businesses (FOB) so prevalent in this sector? What is it about the construction industry that is so conducive to the formation and longevity of FOBs?

It could be that in the construction world, a lot of knowledge is passed down from generation to generation, and learning by doing is extremely common. Fathers teaching their sons the trade is a practice as old as time. I myself am the fourth generation of my family to work in the construction industry and am familiar with countless others who work with or for their family members.

It is a trend that is not going away any time soon. Over the next five to ten years, in fact, it is expected that the number of second and third generation-operated FOBs will increase greatly as more and more baby boomers retire and pass control of their family businesses to their sons and daughters.

This growth of family-owned firms does come with certain risks, however. While family-owned businesses as a whole tend to meet with success into the second generation, third and fourth generation companies run by a family are much less prevalent. According to the Conway Center for Family Business, more than one out of every three family-owned businesses successfully makes the transition from the first generation to the second. That trend, however, tends to end at the third generation, as only about 12 percent of all FOBs are viable into the third generation of the family and an even smaller percentage – about three percent – make it to a fourth generation.

Why do family firms in the construction world meet with so much comparative success? Strong internal mentoring and the team- and project-based nature of the work may allow FOBs which operate within the construction industry to remain viable through generational transitions at a higher rate than most other sectors. It makes sense that in professions where co-workers need to form bonds akin to those normally reserved for family members to be safe and productive, family-operated businesses would remain viable longer than in other types of industries. It also stands to reason that if “brotherhood” and being able to rely on the person next to you to do their job safely, efficiently and in a productive manner are required characteristics for a construction worker, actual siblings starting their own company to make a go of it would be commonplace.

While most companies of all stripes strive to create and maintain a positive workplace culture, that positive culture can be much easier to attain for family members who’ve grown up together and already have that sense of team and a willingness to help each other so that everyone can succeed. Family, after all, is by one definition a group of people united by certain convictions. There is also much to be said about knowing your co-workers on a personal level; that more intimate knowledge of the people you rely on from nine to five can make a world of difference. The inherent trust and honesty which is more often than not common in the family environment also lends itself well to the small business model, and to an industry which is held accountable to such high standards.

The fact that a large portion of the operators in the construction sector are local may also play a part. While national and even multinational companies do exist and thrive, a large percentage of construction is performed locally. This local leaning makes the smaller “mom and pop” operation – which is commonplace in construction – much more viable and competitive, as your local construction company, engineering firm or general contractor isn’t competing with large multinationals constantly for contracts.

In the world of construction, non-family-owned firms can benefit from incorporating aspects of the family business approach. A strong and shared sense of values often underpins the most successful family firms, and this can be achieved with a values-driven vision guided by management. That tightknit sense of teamwork that most FOBs possess is also a worthy goal, and can be built through team-building exercises and a positive and supportive workplace culture.

The converse is also true; FOBs can integrate certain traits and aspects from their non-family owned counterparts to strengthen their organizations and help create a more robust and resilient company. A lack of well-defined roles and responsibilities is the bane of any business, and the proverbial corporate ladder, or a well-structured internal management tree, is something that occasionally lacks in a family-operated company.

Other challenges that can arise in family-owned businesses may be more insidious. For example, for second or third generations of workers in a family business, are they working in the family business because they truly love the industry and enjoy the work? Or are they working for the FOB because they feel the pressure and obligation to follow in their parents’ footsteps? Do the children of small business owners feel free to pursue other goals if that is their wish?

The issue of discipline can also be a tricky one when working with family. Accepting discipline from a superior or a manager is tough enough when said manager is simply a colleague; accepting discipline from your boss when that person is your sibling is on a whole other level.

Making employees who are non-family members feel equal can present certain challenges as well. Avoiding favouritism is difficult for some companies, and when a significant percentage of a company’s employees are related, avoiding favouritism – or even the appearance of favouritism – becomes even more challenging. When it comes to remuneration, promotions, opportunities and rewards, it’s critically important that they be equitable and merit-based. Everyone must be held to the same standard.

For those who enjoy working with a tightknit, focused team, the benefits of building or joining a successful, thriving family business can far outweigh the risks, however. It may be an opportunity to keep a family dream alive; to go to work every day with people whose company you truly enjoy; to effect change and be able to see your own values and vision come to life.

Seeing Red

In 2018, the Canadian Federation of Independent Business (CFIB) released several of the worst examples of so-called “Red Tape” that businesses and developers need to complete before getting projects off the ground. The list reads almost as a cautionary tale for anyone hoping to get a development, whether a condominium or a warehouse, completed quickly and on time.

December 14, 2019, 5:56 AM EST