The largest wealth transfer in human history is happening now, with over $74T USD being transferred from older to younger, next-generation, rising leaders. Family business leaders are confused, impatient, and aware of the urgent changes required to sustain their legacies.
When I speak to older family business leaders, they often say, “I can’t sleep. I don’t know who is capable of taking over my business. And frankly, I don’t know what else I’d do.”
Younger family business leaders, in turn, tell me, “I’m tired of waiting. I’ve done everything I’ve been asked to do. I’m stuck in the middle. Our people sometimes think I’m in charge, but I still need approval from my parents or the owners.”
However, the truth is that family business leaders need to change their mindsets across generations. Older family business leaders must give up control and develop a multi-generational purpose or legacy. Insights garnered from the results of the 360 Leadership Consulting process by Assess Next Gen, LLC, suggest that younger family business leaders will gain clarity about their careers, succession and future by adopting these 5 behaviours:
1. Keep It Confidential
Families are the lifeblood of positive social change. Throughout history, they have collaborated to bring tremendous wealth to their countries and businesses. In any country or sector, the most important thing you can do to support your family is to keep confidences about family wealth. When you do, you’ll develop an in-depth understanding of financial literacy. Families that practice confidentiality develop substantial “family capital,” which I define as “a dynamic social construct of intentionally lived, shared values.”
Confidentiality is the first behaviour listed in this article because the resulting family capital drives every aspect of a family business and its decision-making process. Next-gens need to connect with others to develop financial literacy, which will help them discuss finances, values, growth, risk, profitability, and legacy.
2. Find Your Voice
Next-gen leaders must assess their strengths, prove their capacity, drive succession and continuity decisions, support their elders, model their cherished family values, and celebrate innovation, profitability and legacy without conflict. That’s a long list! In order to create that impact, they need their voices to be heard. One of the most positive results of digital access to information and social media is the amplification of marginalised voices. The agency provided by increased access gives individuals the opportunity to express themselves and talk about the things that they care about. Innovations occur when people share and apply new ideas. It is important to give next-gen leaders the opportunity to express their thoughts and feelings on important topics.
3. Engage in Teamwork
Business leaders need teams. To ensure the effectiveness of next-generation business leaders, it is important that they have a trusted team around them. All successful business leaders are surrounded by trusted experts who can provide confidential insights, collaborate on options, and accelerate decision-making. They practice the key behaviour of sharing important information with their teams. You can’t do it alone, and you shouldn’t have to. Next-gen leaders need a great team around them to help them make smart business decisions.
4. Acquire Knowledge
Curiosity is the currency of learning. It’s important for leaders to maintain a desire for knowledge. Identifying new information or strategies can produce new innovations for a business. For example, we know that owners typically reward employees who provide outstanding service. That’s one reason employees are loyal, stay committed, and drive innovations. Business leaders who identify this pattern can learn from it, observe its advantages and shortcomings, and implement their new knowledge to better their own business and in this case, boost company morale in the process. Next-gen leaders must develop a discipline of always acquiring new knowledge.
5. Develop a Strategy
Owners must think strategically because they are responsible for long-term asset management. In the last 20 years, more than 50% of public Fortune 500 companies have disappeared. Family businesses, though, are more likely to survive when their owners are active participants in financial discussions and distributions. Most have written value statements, constitutions, employment guidelines, and shareholder agreements. Strategic preparation and planning are key behaviours for business owners. Without it, a business will not be flexible when a crisis hits and will go the way of the forgotten public Fortune 500 companies. Through observing their predecessors, next-gens learn from active owners.
Next-generation business leaders have a wealth of knowledge at their fingertips. With access to information available at the touch of a button, the capabilities of today’s businesses are endless. To make the most of those opportunities, it is important for business leaders to consider all aspects of their company and its identity. Maintaining confidentiality, a strong sense of self, a connection with the family, a desire to learn, and surrounding yourself with people you trust are essential factors for initiating change and securing your legacy for generations to come.
Interested in developing these skills?
The best next step for you is to join our Next Gen Peer Groups. This launch closes on November 30, 2023, for the January 2024 start. You can nominate someone, apply today, or register for the next launch in 2024.
The Family Business Consulting Group would love to help you and your family business leaders transform your family enterprises.
Doug Gray, Ph.D., PCC, is a consultant with the Family Business Consulting Group, co-founder of Assess Next Gen, LLC, www.AssessNextGen.com, an author, speaker, researcher, and Next Gen advocate. He can be reached at firstname.lastname@example.org.