Show download pdf controls
  • Key insights

    The key insights were:

    'Private groups' is an acceptable descriptor

    'Private groups' was largely regarded as an appropriate label by respondents who participated in this research, with both 'private' and 'group' having relevance.

    'Private' was seen to be a good descriptor, with many regarding key details about their organisation as private and confidential. In addition, many pointed out that 'private' was a good descriptor in that it differentiated their organisation from larger public organisations that had a much more bureaucratic decision-making approach.

    'Group' was seen to be appropriate by most, as the majority had multiple entities within the one group.

    Turnover is not necessarily the best indicator of size

    Private groups did not regard themselves as small or large based on absolute measures such as the size of their turnover or their staff numbers. They tended to benchmark themselves against competitors in their industry and viewed their size relative to those competitors. Thus, an organisation viewed by the ATO as large might not be large in the eyes of the organisation, while conversely, an organisation viewed as relatively small by the ATO might be viewed as relatively large by the organisation.

    Further, some private groups had large turnovers, but very low profit margins and consequently the respondents did not view themselves as big businesses. However, they believed that the ATO viewed them as big businesses, and thus had expectations that they would have more resources available than was actually the case.

    Decision-making is driven by a small, committed group

    A key characteristic of almost all private groups interviewed was that decisions of importance were usually made by a small group of owners – often only one or two people. This resulted in the organisation believing it was able to make quick decisions, and to respond quickly to issues as they arose. Indeed, quick decision making was often described as one the main drivers of the organisation’s success.

    However some (usually non-owners) also argued that sometimes quick decision making by owners could result in negative outcomes. In particular, business owners were not always considered to be receptive to advice from others. This could lead to a lack of appropriate information and inadequate consideration of all relevant factors when making decisions.

    Owners possess breadth of knowledge about the organisation

    In many cases (especially for family companies) it was claimed that the owners possessed a deeper level of knowledge of the various functions in the organisation as compared to senior management in other (non-private) organisations. This is because it was frequently the case that the owners had either started the company and were therefore familiar with most of the basic activities in the company, or the owners were members of a family and had been brought into the organisation while young and worked in a broad range of company functions prior to entering senior management.

    Organisation success is often largely attributed to the owner

    In many cases the success of the organisation was largely attributed to the owner(s) due to some combination of a range of factors including the:

    • owner(s) possessing a detailed understanding of the business and its market
    • owner(s) having a high level of capability and expertise in the relevant market
    • owner(s) having a good network of contacts resulting a greater opportunity to obtain business
    • high level of commitment of the owner(s) to the business and the staff
    • high level of commitment of staff to the owner.

    Private groups believed they lack resources relative to public companies

    A defining characteristic of private groups was a perceived lack of resources, and thus most had a focus on efficiencies within the business. Further, owners and senior staff within private groups were very committed to the success of the business. These factors combined tend to make many impatient with any activity that they felt was not directly relevant to the business, especially from the perspective of contributing to profits. This was particularly relevant to government bodies, whether it was applying for an R&D grant, responding to ABS queries for information or responding to the ATO. Respondents wanted to address such requirements as quickly as possible and to fit them into their normal workflow processes.

    Corporate structures are avoided by some

    Some private group owners avoided the development of formalised decision making and corporate governance structures within their business because they:

    • expected increased structure would reduce decision-making speed and agility within the business
    • saw it as unnecessary, as it was not seen to be central to the prime focus of the business.
      Last modified: 19 Dec 2018QC 57678