Family-owned Firms as Employers

Nicole Gottschalck / Christina Günther / Franz Kellermanns - March 12, 2021

Tips for practitioners

The scientific study "For whom are family-owned firms good employers?" investigated which type of staffmember – blue-collarworkers or white-collar employees – is more likely to leave a familyfirm. Additionally, this type of staff member in family firms was compared with its non-family firm counterpart. Building on the findings of previous research, staff outside of the family both with and without leadership responsibility were examined to determine the likelihood that they seek alternative employment. The key finding was that white-collar workers employed in family firms were more likely to change employers than their non-family firm counterparts. Blue-collar workers in family firms, however, were less likely leave than their counterparts in non-family-owned firms.

In the Linked Employer-Employee Panel of the Research Data Center of the Federal Employment Agency, upon which the study was based, employees were asked to indicate their intentions to quit by answering the question, "In the past 12 months, how often have you thought about changing your job?" Responses were measured on a scale from 1 - "never" - to 5 - "every day." The survey inquired as to whether they maintained a leadershiprole and whether they were blue- or white-collar workers. Other questions targeted their retention and perception of whether they were treated fairly and provided opportunities for upwardmobility. 

The results also showed a significant distinction between blue- and white-collar staff members in leadership positions within family firms:

•  In general, blue-collar workers were less likely to leave a business (family-owned or not) than white-collar employees. There was hardly any correlation between the desire to change companies and the family-management of a business.
•  White-collar workers in leading positions in family firms were more likely to leave than white-collar workers in non-family firms. The reasoning behind this is that as they gain knowledge and experience within the family business, these employees often push back harder into the labor market. They may also feel thwarted upon the realization that their opportunities for advancement may be limited by factors outside of their control, i.e., the favoring of relatives regarding promotions.
•  Blue-collar workers with leadership responsibility in family firms were less likely to leave the firm than their counterparts in non-family firms. Leadership responsibility in a family firm facilitates a sense of increased involvement and embeddedness within the company.
•  However, intent to seek new employment among all employees with leadership responsibility, both blue- and white-collar, was lower in family firms than in non-family firms. Previous research has shown that the social atmosphere in family firms helps staff feel more connected to and engaged in the company.

Literature references and methodology

Building on the Linked Employer-Employee Panel of the Research Data Center of the German Federal Employment Agency, Dr. Nicole Gottschalck, Professor Dr. Christina Günther, and Professor Dr. Franz Kellermanns conducted separate analyses of owners and staff of 782 German companies with more than 50 employees. These included 394 family-owned companies (with the condition that more than half of the company be family-owned), 388 companies that were not family-owned, and a total of 4,245 employees who did not belong to an owner family - including both craftworkers and office staff.

• Gottschalck, N./Guenther, C./Kellermanns, F. (2020): For whom are family-owned firms good employers? An exploratory study of the turnover intentions of blue-and white-collar workers in family-owned and non-family-owned firms, in: Journal of Family Business Strategy, 11(3), 100281.