Families in Business asked the next generation to tell us their views on the future and how they see themselves and their family. Do you know what the next generation of your family really thinks about you and your business? Read on to find out…
The succession problems plaguing many of the world's most respected family businesses underscore the need to better understand how the next generation views the world they live in. While no two scions will ever be the same, we've found some marked similarities between many of the members of the next generation of family business owners.
The next generation respondents to our survey came from all over the world: North America, Europe, South America, Asia Pacific, Africa and the Middle East. This wide geographic split was also reflected in the range of industries that the respondents' family businesses were focused on. For the record, these included: food, petroleum, pharmaceuticals, real estate, retail and tourism.
Sixty six percent of respondents were aged 35 or younger, while 80% have already joined the family business. In this article, we will examine the results of the survey in detail to determine what the next generation of wealthy business-owning families think about life, the universe and, more importantly, taking over that most treasured possession – the family business.
Here, there and everywhere
Let's get the stereotypes out of the way first. North Americans are less tied to their businesses than Europeans, while Asian and Middle Eastern families have a more rigid and close family structure. Right? Well, yes actually.
A significant majority from both North and South America get the most satisfaction from reaching personal milestones. Conversely, every Asia Pacific respondent, plus a significant majority in Europe are more concerned purely with business success.
To ram the point home, exactly half of North Americans also saw themselves pursuing other interests outside of the family business in 10 years time, yet 100% of the next generation in Asia Pacific and 83% of Europeans saw themselves running the family business in the same timeframe – clear indication that families from these parts of the world are much more tied to the family business. So far, so stereotypical.
In a region generally regarded as being more secretive and patriarchal, the South American next gen members we talked to were equally split between intending to work in the family business, intending to run the family business, and intending to work in the family office in 10 years time. Interestingly, none saw themselves pursuing interests outside the family business, which could support the fact that they are very close-knit families, or that they expect the businesses to grow rapidly in line with emerging economies.
Every South American who answered also said they have felt pressure to join the family business while two thirds of Europeans said they have also felt pressure. This compares to three quarters of North Americans who said they have not felt pressure to join the family business, again highlighting the fact they are seen as being less tied to the family business than their counterparts elsewhere in the world.
Should I stay or should I go?
As we have seen, 80% of respondents have joined the family business already. However, the overriding reasons behind joining are varied, reflecting the wide geographical and cultural split of the respondents. Reasons included:
- "A sense of responsibility".
- "The correct position became vacant at the right time in my life".
- "A belief that I can do good for the business".
- "Golden handcuffs!"
Equally, the reasons given by those who have not joined are diverse. "I chose to be involved in the family foundation as opposed to the family business", said one respondent, reflecting the increasing importance of philanthropic vehicles to business-owning families. "We have a policy that limits family members from working in the family business", said another, highlighting the fact that not every next generation member is guaranteed a job in the family firm.
In terms of what most concerns the next generation in the world today, there are some clear differences, depending on whether they have joined the business or not. For those that have already joined, family business issues and the economy are top of their list of concerns. For those who have not, it is war, terrorism and security, followed by the environment. Reaching personal milestones gives them both satisfaction in life, but those who have joined also cite business success, whereas those who have not joined say helping those less fortunate than yourself is also satisfying.
This demonstrates that there is a clear distinction with those who have not joined the family business being more concerned with issues whose significance stretches beyond the family business. Joining the family business on the other hand certainly focuses the attention of those who work in it on issues relating to the company.
Educating younger family members about the history of a family business takes many different forms. While some families have established formal vehicles – family get-togethers, websites and books – others have yet to develop such procedures.
In terms of what they are most proud of as regards the business achievements, those who have already joined the business made some interesting observations.
"The business has a 115-year history and is a leader in its industry," said one respondent, reflecting one business's proud heritage.
But it's not just a question of being a market leader. "Overcoming the struggles of succession from generation to generation" was the proudest achievement in the eyes of another. "Expanding a business beyond its original purpose", and "being a huge part of the local area" were also cited as areas of pride.
As regards the future, over half of those who have joined (56%) see themselves eventually running the family business. For those who have not, the future is less certain – they are equally split between working or running the family business or pursuing other interests completely. For some this shows, paradoxically, a desire to return to the family fold.
Family business vs other business
One of the most important decisions that next gen members face concerns how they map out their futures. For some, growing up in a successful family means an exciting challenge to take the business forward by adding their own personal stamp. For others, it can feel like nothing more than a heavy burden.
This dichotomy was reflected in our survey, where 50% saw themselves running the family business in 10 years time and 25% believed their future lay elsewhere, pursuing other interests.
Of those next gen members who see themselves running the family business, 90% have already joined the family business.
It is interesting to speculate on whether they joined the business because they wanted to run it in the future or whether they hope to run it because of what they have seen and done having joined the business.
One of the things that defined those who intend to pursue other interests in the future was their worldview. Personal issues were what respondents were most concerned about in the world today, followed by family business issues. Equally, reaching personal milestones gives them the most satisfaction in life, followed by helping those less fortunate than themselves.
This demonstrates on the one hand a preoccupation with matters relating to themselves and on the other a desire to help other people. However, what is clear is that, compared with those who see themselves running the family firm, business success is much further down their list of priorities if you're not already in the family firm.
One final interesting fact about this particular sub set – none of the respondents said they looked up to their father – two thirds said it was their mother instead. One respondent stated that it was because "she is emotionally/mentally supportive, she is honest and she gives me constructive feedback."
A question of pressure
One of the biggest flashpoints in business-owning families relates to succession and one of the most important aspects of this is whether next generation members feel pressured into joining. And within the next generation themselves there are many examples of varying thought.
Although the majority felt no pressure to join the business, 45% said they had felt pressure to join the family, which is a staggeringly high number considering the enormity of the task ahead of them. Of these, 89% have already joined the business. However, there is no suggestion that they were forced to join. Indeed, over half (56%) of those who felt pressure still see themselves running the family business in 10 years time.
Interestingly – when compared to those who saw themselves pursuing other interests in 10 years time – 100% of those who felt pressure looked up to their father the most. While it could be inferred that the father was the person applying the pressure, the reasons given as to why the father was so highly revered do not bear this out. Reasons included:
- He leads by excellent example.
- He left me the values that make me who I am today.
- For his commitment and dedication to running our family business that he only joined through marriage.
- He has a unique creative mind.
As for those who felt no pressure to join, a significant minority (40%) believe helping those less fortunate than themselves gives them the most satisfaction in life, behind business success and reaching personal milestones. Again, it might be inferred from this that no pressure was applied because they had made it clear from the outset that their interests lay outside the family business.
Nevertheless, exactly half still see themselves running the family business in 10 years time. This is backed up by the fact that 80% have already joined the business.
Time will tell if most next generation members will take the reigns of the family business or prefer to go it alone. One thing remains certain; whether or not the next generation remains in the family business, they are sure to go on to do some promising things.
NB. The Families in Business next generation survey should be viewed as a snapshot of the demographic as a whole. The results are not statistically significant.
Click here to read about the next generation working in the family office.