Jason Holt, owner of Holts Gems, a second-generation Hatton Garden jewellery business in the UK © Charlie Bibby/FT

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Holts Gems, a second-generation family jewellery business founded in 1948 by Robert Holt, a Jewish refugee in London’s Hatton Garden, has grown into one of the industry’s largest providers of gem-cutting services.

Until this year it had employed a team of 15, including experienced designers and gemologists. Now, after the first pandemic lockdown closed Holts’ workshop for three months, the company is down to just seven full-time staff.

“This year has been the most brutal in my memory,” says Jason Holt, the current owner. “From March to May we had almost zero revenue because we were forced to shut our premises and we had never succeeded in trading effectively online. We were haemorrhaging money.”

However, Mr Holt found an innovative solution to cut his operational costs. The craftspeople he had made redundant were immediately taken on as suppliers. As part of the severance package, Holt gave them equipment from the company’s workshop, a share of the client base and other support to set up as sole traders, working from home.

Robert Holt in his first Hatton Garden office in the 1950s
Jason Holt, owner of Holts Gems © Charlie Bibby/FT

The business has recovered strongly since then, meaning several of these former employees are busier than when they were on the payroll, according to Mr Holt.

“They have so much work on that they are quoting two-month lead times, so financially they are doing well,” he says.

It was difficult to lose the “unique selling point” of having one of the largest in-house teams of lapidaries — experts in cutting and engraving precious stones — in the country, Mr Holt adds. “But it saved us about 30 per cent of the operating costs. If we hadn’t let those people go we would not have survived.”

Company bosses have had to make tough commercial decisions as a result of the economic fallout from the coronavirus crisis. There is, however, some evidence family businesses have proved more resilient during 2020.

Credit Suisse, in research that began in 2006, found that despite fewer resources to support schemes such as furloughing staff, family businesses have performed better financially this year than others.

For many family businesses the pandemic has also been a chance to make radical changes that play to their strengths of solidarity and long-term planning.

Thomas Clauss, professor of family business at Witten/Herdecke University, and Sascha Kraus, professor of management at the Free University of Bozen-Bolzano, have spent the past nine months studying the impact of Covid-19 on more than 40 family businesses in Austria, Germany, Italy, Liechtenstein, and Switzerland.

The group found that the crisis is bringing about a significant, yet unintended, cultural change in these organisations. One common characteristic was a significantly increased level of solidarity between management and workers. Staff have been accepting changes in working hours or putting in extra time unpaid.

These companies have also been making dramatic changes to their business models, notably through digitisation that has generated new revenue growth and profits.

“Family firms do not necessarily do better in a crisis, but they are better prepared to get out of the crisis. They can often move fast because of low hierarchies and owner-manager structures,” Prof Clauss says.

“Most family businesses don’t like to raise money externally, but when they do, they only work with a few banks. This means they build stronger relationships with these institutions, and that social network enables them to be very flexible in times of crisis like this.”

Family members also often feel a high level of responsibility for their employees, which often translates into better empowerment of staff, Prof Clauss adds. “We spoke with a German toy company, which gave every employee who had to work from home a budget of €300 to buy whatever equipment they thought necessary to do their job remotely.”

Communication was often more intense than it had been previously with researchers noting a rise in daily information briefings. There were also WhatsApp and Slack channels created specifically to update employees about what was going on in the business, and to address employee concerns directly, according to Prof Clauss.

He cites one company where the board grouped itself into four roles, with one group responsible solely for communication within the organisation. “Every family firm combines two worlds: the business world and the family world. These worlds have to be aligned,” he says.

Leon Spronken was born into a family business — his father set up a company selling cigarette and soft drinks vending machines. But he created his own dynasty by acquiring Convoi, a Maastricht-based engineering company employing 350 people. This is now jointly owned with his three children, one of whom heads the Dutch division of the business.

“I came from a family business so this was in the genes,” Mr Spronken says.

Although it has been a hard year for Convoi with revenue down by 35 per cent in some of its business units, the company has been able to create opportunities, such as setting up a department that refits workplaces to be coronavirus safe. The company is on track to hit the profit target it set for itself a year ago, before the pandemic hit.

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“You have to be a little bit lucky. We were in a position where people could continue working, although not as efficiently,” Mr Spronken says. While the company was behind for a couple of months, it managed to catch up, made no redundancies and paid suppliers on time.

“As a family business we rate sustainability high above short-term profits,” he adds. “That is why we decided to also be there for our suppliers.”

Holts Gems also hopes to come out of this year more profitable. “I would like to think that we have approached this in a better way than people who don’t have an emotional connection to the business they run,” Mr Holt says.

Among the seven remaining staff, he has promoted one to help run the business. “People have shone in these dark moments. Our new chief operating officer is a jewellery designer and qualified valuer, who has been with us for over 12 years and throughout the months of lockdown has shown a thirst to be proactive, coming up with new ideas for services, including rebuilding the website,” he says.

Family business as a force for change, post-Covid

Andrienne d’Arenberg is an executive in residence at Oxford university’s Saïd Business School who studies family businesses and their impact on society and the environment. Family-owned companies typically have a “concentrated ownership” structure, where a small number of large shareholders control the business. This makes them “a powerful catalyst for change” as economies and societies recover from the pandemic, Ms d’Arenberg says. “Business-owning families have the potential to become inspiring stewards and a phenomenal collective force to rebuild a fairer and more sustainable economy.”

Here are her three priorities for family business owners to balance short-term pressures against long-term opportunities:

Agility: Don’t fall in love with your past. Planning for the post-Covid era will mean many family businesses have to make a broader assessment of their company or industry’s vulnerability to disruption and reflect more deeply on how to adapt to a fast-changing context while upholding family legacy.

Responsibility: How you make your money matters. The transition towards global sustainability is no more an ideal but a strong business trend. As long-term thinkers, owners should understand that building a more sustainable economy is not just the right thing, but also the smart thing to do.

Family: Make family ownership a strength, not a liability. In times of disruption, owners need to signal stability and show the human face of leadership by speaking with one voice, and to clearly communicate their commitment and strong sense of purpose to their business and employees.

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