Economics; Family Businesses & SMEs

Family-owned Firms as Employers

Who harbors more frequent intentions to change jobs: Blue-collar or white-collar staff?

Working in a family-owned firm can offer a number of advantages and disadvantages for someone who is not related to the owning family. Interpersonal relationships can be closer-knit than those developed in non-family owned firms, and the work environment tends to feel less formal and more collegial. Inversely, ambitious staff members seeking more responsibility and heightened career opportunities may feel hampered by an entrenched family hierarchy and perceived favoritism toward relatives.

The scientific study "For whom are family-owned firms good employers?" investigated which type of staff member – blue-collar workers or white-collar employees – is more likely to leave a family firm. 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 leadership role 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 upward mobility. 

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.
Tips for practitioners
  • If you are a family firm owner who hopes to retain valuable leaders, consider implementing distinctive strategies for blue- and white-collar workers.
  • Utilize the sense of community and deep collegial bonds that a family firm provides! Nevertheless, bear in mind that ambitious white-collar workers require a path for advancement.
  • Establish development prospects specifically for staff in leading roles in order to keep them in the company, even if this entails favoring them over relatives!
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.
Authors

Assistant Professor Dr. Nicole Gottschalck

Dr. Nicole Gottschalck is Assistant Professor of Personnel Economics at WHU – Otto Beisheim School of Management. Her research focuses on personnel management and business development in the specific context of small and medium-sized firms. Here she investigates, among other things, how the intention to stay of skilled workers and leading employees can be increased and how changes in the structure of the firm affect interpersonal cooperation. Nicole Gottschalck is affiliated with the Bucerius Law School in Hamburg and is supported by the Joachim Herz Foundation.

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Professor Dr. Christina Günther

Professor Dr. Christina Günther heads the chair for small and medium-sized enterprises endowed by the Koblenz Chamber of Industry and Commerce. Her current research projects investigate, in addition to several other topics, the challenges in the growth process of small and medium-sized enterprises, cooperation between companies, and the relationships between ownership structure, location, innovation activity and competitiveness. Professor Günther places particular emphasis on the transfer of findings into practice and is an editor of the journals Small Business Economics and Entrepreneurship Theory and Practice.

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Professor Dr. Franz Kellermanns

Professor Dr. Franz W. Kellermanns holds the Addison H. & Gertrude C. Reese Endowed Chair in International Business and is Professor of Management at the Belk College of Business at the University of North Carolina at Charlotte. He is also an affiliated professor at the Institute for Family Business and Small and Medium-Sized Enterprises at WHU – Otto Beisheim School of Management. His research interests include but are not limited to international business, strategy processes, and entrepreneurship with a research focus on family businesses. Professor Dr. Kellermanns is also co-editor of the journal Entrepreneurship Theory and Practice.

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