The Wates Group is over a century old, and one of the country’s most prominent family firms and has evolved over time as it continues to build for the future. Over that time, it’s evolved to match the evolution of the construction industry, moving from building suburban terraced homes in the 1930s, to developing construction services in the ‘50s, to volume house building in the 70s and 80s, to the business model it has today, which spans construction, property investment, and housing maintenance. All of which sit alongside a renewed interest in housebuilding. As Tim Wates says, “Over the years we’ve had to reinvent ourselves more than once. What’s always held us together is the ‘family factor’ – that’s what’s given us continuity, which is especially important in an industry that’s as cyclical as this is.”
The stability of the family ownership structure helped the Wates business weather the downturns – even the severe recession of the 1990s – and learn the lessons of those challenges. “We realised that we’d been too highly geared, in an effort to achieve more aggressive growth. These days we aim to grow more sustainably and keep the gearing at more manageable levels. The overall objective is to be ‘cycle resistant’. No-one can be cycle proof, that’s impossible, but you can have strategies and be structured in such a way as to make you more resilient. That’s what we’re aiming for. We want to be a top-notch business in the built environment – substantial, ambitious, and sustainable. That’s the bottom line.”
‘Keeping it in the family’ remains important too. “We’re looking 15 or 20 years ahead, at the sort of business we want to hand over to our children. We need an outlook and a corporate structure that’s flexible enough to adapt to new trends, and could allow us to change direction if that’s what we decide to do. We’re also looking at how to manage the family wealth, but also to support our children, whether that’s into a career in Wates, or not.”
“We don’t expect any of the next generation to come into Wates and be Wates their whole life, without exploring what else might be out there. We wish to create opportunities for the whole of the next generation, so they can determine their own path, and become entrepreneurs, if that’s where their talents lie.”
“We’ve looked at what other families do, and we’re clear that this has to be the right thing to do. It’s all part of developing a ‘professional ownership’ mentality, rather than a ‘running a business’ mentality, which I think all family firms need when they get to this size and stage of maturity. Values are a key component of that – we have values that we consider are the values of family ownership, which relate to but aren’t the same as, the corporate values of the group.”
Wates also has a family council, and the younger generation will be encouraged to participate in that. “Though that, in itself, creates challenges. Sitting in a council meeting alongside the very experienced older generation can be daunting if you’re only 20 or 21, so we’re exploring ways to introduce them to it gradually, and build their confidence. The council is really important to us as governance mechanism, so getting this right is key.”
“Looking ahead, setting the right corporate strategy for the long term is a big challenge for us, and in a family firm you also have to be mindful of the day-to-day challenges of working together. We do work together well, but you can’t allow yourself to get complacent, and as time goes on and the number of shareholders grows, it gets harder. That’s why regular, respectful communication is absolutely critical.” Tim’s advice to other family firms? “Don’t rely on friendship and love to get you through – if issues arise get stuck in and address them properly. And if it helps, bring in professional facilitation.”
This piece was featured as part of the PwC Family Business Survey and has been reproduced with their permission. Find out more about the survey here.