Not to be confused with publicly traded corporations, such as Apple, Amazon and Goldman Sachs, there is a sector that is not as well known—privately held businesses.
Private companies, which are owned by individuals or corporations, are not publicly traded and receive zero capital from the public. They include big names like SpaceX, Cargill, Mars, Koch Industries and Hobby Lobby. Other privately held companies include tech startups, private equity firms, hedge funds, family-owned organizations or small and midsize organizations.
To adapt their operations to meet changing market demands and enhance productivity levels, private companies are embracing innovation, technology and strategic workforce planning, according to Deloitte’s Private Company Outlook: Productivity survey published on Tuesday.
The report underscores the role of workforce development in driving productivity improvements, with an emphasis on reskilling programs and talent management strategies. Deloitte Private captured insights and perspectives from privately held companies with revenues ranging from $100 million to over $1 billion.
To dive into this business segment, in a one-on-one Zoom video call, I spoke with Wolfe Tone, the vice chair and United States and global leader at Deloitte Private, who oversees a diverse range of clients, including privately held businesses, family enterprises, private equity funds, emerging growth companies and high-net-worth individuals.
Key Takeaways From The Survey
Private companies are prioritizing productivity enhancements, with a focus on improving operational efficiency and effectiveness to drive growth and competition.
“We’re seeing that increasing productivity has risen to the top of the priority list for private business leaders—and efforts to support that strategic goal include both investments in re-skilling existing employees and advancing workplace technology,” said Tone.
Investing In Human Talent
To drive productivity, employers are putting human capital at the forefront. More than half of the respondents from larger organizations with annual revenues $500 million and above (51%) indicated that the hiring of qualified skilled talent is their primary focus over the next 12 months. Respondents from smaller organizations emphasized reskilling and upskilling as top priorities (45%).
“Our previous survey about private company talent strategies showed that job security, access to leadership, company vision and career advancement are the main talent attractors for organizations. That being said, given the expansive definition of human capital, it’s clear that prioritizing investments toward re-skilling talent in order to scale productivity could lead to higher job satisfaction and enhanced employee engagement across an organization,” said the vice chair.
Leveraging Emerging Technologies
Nearly 90% of C-suite, presidents, board members, partners and owners at privately held companies expect artificial intelligence will boost productivity within the next three years. However, respondents from larger companies are more apt and better positioned to prioritize investments in technology and digital tools (44%) compared to smaller companies (16%).
Private companies are facing challenges related to limited cash flow, digital transformation and the need to bolster productivity amidst evolving market dynamics. “Organizations that can’t increase productivity expect to face slower business growth and declining valuations,” the report concluded.
Working At A Privately Held Business Versus A Public Company
Although publicly traded companies are seen as aspirational places to work, the Deloitte Private leader highlights some advantages of working for a privately held company. According to Tone, private companies have more flexibility in their management and decision-making processes due to fewer regulatory constraints. Private companies can make strategic decisions quickly, as there are not typically layers of bureaucratic management and regulatory filings.
He adds that private companies, characterized by ownership held by a small set of stakeholders such as founders or family-owned management over generations, enables businesses to consider long-term perspectives.
Leadership can focus on core business initiatives without the need to constantly satisfy short-term interests of shareholders. This aspect minimizes stress for workers, barring them from worrying about beating quarterly goals and being subject to layoffs to appease shareholders.
It also affords workers the comfort level that the goal of the company is to stand the test of time rather than doing whatever it takes to make money in the near term to drive up share price. They have more authority over operational decisions.
Since they are not publicly traded on stock exchanges, there is less constant public scrutiny, resulting in less pressure on management and employees.
However, because they are not publicly traded companies, they may face challenges in raising capital, which could hinder growth and expansion plans. Investors can experience limited windows of opportunities to sell their shares.
Source: Forbes
