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Expansion on Hold Due to Lack of Skilled Staff

17.10.2005

Expansion Plans on Hold Due to Lack of Skilled Staff

Skills shortage affects NZ family businesses' growth ambitions

Russia and New Zealand have something in common when it comes to family businesses ? they lead the world with their concern about the impact of the skilled workforce shortage on their expansion ambitions.

According to a recent Grant Thornton International study of more than 3,000 family businesses around the world, 30% cited the availability of a skilled workforce as a key constraint on their ability to expand the family business.

Of the countries surveyed, the most affected were Russia (53%), New Zealand (52%), Australia (45%) and the UK (41%).

Grant Thornton New Zealand spokesman Richard Sherwin said the skilled workforce issue was virtually a global problem, but more acute in New Zealand than most places, with a strong drift of skilled New Zealanders to other countries. This undoubtedly had a greater effect on family businesses which, generally, did not have the resources to recruit from other countries themselves.

"At a time when there is a tight labour market, family businesses feel the pinch more than most," said Mr Sherwin. "Unlike those with international connections, they can't transfer people around and many of them just don't have the money to recruit or compete on salaries."

He said another problem was the particular nature of the family business. Senior executives were often hard to recruit as the environment was dominated by family members. Globally, 51% of all respondents surveyed claim that more time is being spent on attracting and retaining key staff compared to last year. And 44% also believe in the importance of sharing the company's core values, mission and goals with all employees.

John Tucker, Director at The International Centre for Families in Business based in the UK, believes that this is critical for the success of the family business.

"Family businesses need to compete for their skilled staff in the global employment pool. It is therefore essential to demonstrate that key employees are valued and seen as providing important skills and input to the business."

"This goes for all employees from the board room down to the shop floor. Successful family businesses need to address the concerns of potential employees by providing appropriate training and development for all staff and recognising the contribution of non-family employees. By doing this and welcoming their input, the business will be more likely to attract and retain key staff as it seeks to expand. The individuals will be taken along for the ride rather than being lost along the way."

In the survey, respondents were also asked to identify the factors that they felt were important in attracting and retaining staff for a family business.

Mr Sherwin said it was interesting to see that New Zealand family businesses put a lot of store in ensuring the all staff understood the company's values, mission and goals; somewhat more so than the average globally.

"In general, New Zealand's family businesses are at least aware of the things they need to do," he said. "The key issue is whether their rating of the factors implies simply strategies or is reflected real actions. Strategy is one thing; strategic action is the key."


| Strategy for Attraction/Retention of Employees | NZ / Global|

| Possessing a good corporate reputation | 78 / 51%|

|Ensuring that all employees understand the | 80 / 44%|
|company's values, mission and goals | |

|Coaching, training and mentoring top performers for| 73 / 36%|
|leadership positions | |

|Developing competitive reward systems and benefit | 47 / 29%|
|packages | |

|Monitoring employee perceptions and acting on | 69 / 27%|
|results | |

|Providing training and development packages for all| 73 / 23%|
|employees | |

| % of respondents rating strategy 4 or 5 on a scale| |
| of 1 to 5 where 1 is of little importance and 5 is| |
| extremely important | |

Source : Grant Thornton International Business Owners Survey, 2005


ENDS

About The International Centre for Families in Business

The International Centre for Families in Business (ICFIB) is based at the University of Gloucestershire and is a joint venture between Grant Thornton UK LLP and the University of Gloucestershire. The Centre seeks to play a major role in supporting the family business community by bringing together both academic expertise and professional experience in the family business arena whilst offering a central resource to families in business and their intermediaries.

About Grant Thornton

Grant Thornton International is an international membership organisation, with each member firm independently owned and operated. Services are delivered nationally by the member and correspondent firms of Grant Thornton International, a network of independent firms throughout the world. In New Zealand there are Grant Thornton offices in Auckland, Wellington, Christchurch, Dunedin and Whangarei.

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