It's no secret that generational challenges exist in any workplace. Every new wave of talent brings its own set of strengths, weaknesses, opportunities and - the most consuming and distracting of them all - threats.
It's hard enough to learn to work together, moving past differences in skill sets or communication styles, to trudge toward a set of common goals. Throw in the velocity of change of today's business environment and at any given moment there can be four generations of thought weighing in on critical decisions for a company’s future.
Add in the emotionally charged and personal dynamics of a family business (more than 5.5 million in the U.S. alone) and you have massive numbers of companies trying to navigate these challenges while tackling the personal and legacy building aspects of what could be their life’s work.
The following are three generational challenges for family businesses, set against the threats each generation poses to each other and the business as emerging generations make the move into leadership.
1. The Crystal Ball of Planning
Where are we going?
Why are we going there?
Who am I in this story?
The newer generations moving into leadership, and ownership, have more on their minds than the day-to-day survival of the business.
According to the 2017 PwC Next Gen Study: “Only 7% of next gens think their family business has a strategy fit for the digital age. In addition, “82% of next gens think innovation is key but only 15% think their own firm has a clear plan.”
In general, younger generations in the workforce demand transparency, clarity and direction of their career path, including the timeline when milestones will be achieved. The same is true from younger leaders of a family business, both for their own personal career path and on a larger scale for the the organization.
Whereas the first generation of a family business may have been in the "winging it" mode 24/7, and forced to be agile by nature, the following generations can represent the move to a more professionally managed organization, and with that the demand for strategic vision, purpose, mission and a succession plan.
They need to envision the future state so they can work with purpose to achieve it.
"The common denominator is strategic direction: the need for a compelling business strategy and practical execution plan for both the short and medium term.”
While there is no real crystal ball for this, a structured strategic plan, with the ability to adjust as the company evolves, serves as an objective voice at any table, no matter who happens to be sitting there. And once the strategic plan has been created, the leadership and succession plans can be built around the needs of the organization in the future.
Built collaboratively and finalized with the consensus of multiple generations and levels of leadership involved, all can start moving in the same direction.
2. Digital Differences
It’s no surprise that each generation in the workplace has different technology aptitudes. While modern business environments have standardized the use of technology tools over the last 20-25 years, family businesses may still be in transition on a number of more sophisticated processes and solutions.
This goes beyond basic email and operations software and includes:
CRM - Customer Relationship Management
Digital marketing and social media
Managing cyber security risks
Artificial intelligence and emerging applications for the business or industry
This thought is highlighted in PwC’s more recent 2019 US Family Business Survey, where a primary theme is to “Ensure the next generation is deeply involved - they have a lot to offer families grappling with digitalization.” The survey states that 62 percent of family leaders plan to pass it on to the next generation.
While a portion of the Gen-Y/Millennial group, now in their mid-to-late 30s, experienced some of their life before the World Wide Web, the newest workers Gen-Z are “digital natives” having grown up in a world of smartphones, tablets and the cloud.
This provides another opportunity to engage the younger generation’s expertise and familiarity with technology in the planning process. While comfort levels will vary among different generations, the balance that’s provided helps to weigh an aggressive pursuit of what could potentially be a ‘shiny object’ with the seasoned perspective of “do we really need this?”
3. Conflict Management
According to NxtGenNexus, conflicts that are natural in personal family life become magnified in the family business realm.
Examples of common conflicts:
Family conflicts crossing over into the business
Lack of boundaries between family structure and the company structure
Performance management and holding family members accountable for results
Frustration from non-family business leaders over their influence in the business
Furthermore, family businesses grapple with the specific roles that family members have in the business, and how those roles are determined. Other concerns include expectations around ‘earning your place’ in the business, and conflicts that were started by prior generations that can’t be put to rest by the current generation of leadership.
While these conflicts are not new, communication styles between the generations are different, and important to address. Many family businesses seek counsel from outside resources to help open lines of communication and bridge these generational communication gaps.
The simple act of validation of an issue or conflict between family business members can speak volumes in the path toward resolutions. Knowing their issue is identified, common, and shared is the first step.
Recognize that these issues are the elephant(s) in the room—everyone knows they exist and so the first step is being transparent about them.
It‘s important to start sooner, rather than later to resolve and find a path forward on some of these long simmering family disputes. Too many families procrastinate tackling the emotional topics and it takes a tragic event such as a founder’s passing to force the issue.
Having a well-defined business plan, succession plan and ownership plan is key to provide structure within which systems can be created to help deal with these issues.
Creating a consistent process and systems for how things are done in the business is critical. The operations need to move from being managed ‘by personality’ to being managed professionally.
Bridging the Gaps
No matter the long-term vision, succession plan or targeted exit strategy, family businesses must harness the power of multiple generations today, to get results and remain viable for the future.
According to author Sam Bruehl of Banyan Global, in his Harvard Business Review article, “How Family Business Owners Should Bring the Next Generation into the Company,” there are five key elements in which to focus: "Help the next generation find their right roles; Get the group dynamic right; Help them find their collective voice; Create a next-generation development program; Give them room to operate.”
There’s no easy fix for generational challenges in a family business, but the investments made in engaging all generations of the family will pay big dividends in the long run and are key to its success.