There is nothing more constant than the marching of time and for a family business this means actively integrating new generations into business leadership. 1 in 3 family businesses will not last beyond the second generation which means incorporating future generations requires a proactive, careful, and professional approach. One challenge for many families is that these new generations bring their own ideas and expectations about work, leadership, technology, and time. So how do you integrate new leadership without disrupting the culture and values on which the business was built, and yet allow for new ideas and ownership?
Understanding the Generational Shift
Sometimes conversations with younger family members about business can feel like they are speaking a different language. Whether it is the latest slang that they use or the expectations they must have it all can seem foreign. But it is important to understand that Gen Z and Millennials grew up in a world much different than their elders. For example,
- Rapid technological change: Millennials grew up with the internet, but also saw the introduction of the smart phone and all the changes that it brought
- Global connectivity: They are comfortable working in an environment that is far bigger than their local community. They might even have friends who live halfway across the world and whom they have never met. This is normal.
- Greater focus on purpose and values in work: They’ve seen their parents and grandparents sacrifice everything for their job and they aren’t interested in repeating that. Work/Life balance is incredibly important to them.
- More collaborative leadership models: They bristle at top-down leadership and instead value a more collaborative, or peer-to-peer leadership style. Not to mention they are repelled by the sink or swim approach.
When bringing younger generations into the family business recognize that their unique life experiences bring new ideas that are not inherently bad.
Combining Experience with New Perspective
The family business flourishes when the deep industry knowledge and long-standing customer relationships that come with the older generations combine with the digital fluency and new market perspectives of the younger generations. Create pilot projects or experimental initiatives that allow the younger generation to practice leading where they can leverage the knowledge of their elders but still have the freedom to pursue their own ideas. Establish family councils or creating mentoring relationships. Proactively creating opportunities where teams can work cross-generationally will allow the business to leverage the best of all generations.
While generational collaboration can be powerful, it is not always seamless. Differences in risk tolerance, leadership style, and attitudes toward technology can create friction. Older leaders may value stability and proven methods, while younger leaders may push for innovation and faster change. Recognizing these differences early can help families address them constructively rather than allowing them to become sources of conflict.
Preparing the Business for the Next Generation
Most importantly, the best way to plan for the next generation is NOW. Identifying future leaders and then implementing a plan to prepare them to lead the business is the most fundamental piece of succession planning. If you are feeling overwhelmed or want help in creating a succession plan that will set up your business for future growth REGENERATION has over thirty years of experience helping family businesses prepare for the future and incorporate second and third generational leaders.
