In the next five years, 40% of family businesses globally will prepare to hand over the business to the next generation, but the new leaders may find it hard to make their voice heard, according to research by PwC
Sian Steele, UK family business leader at PwC, said: ‘The “next gen” leaders want to be more than just caretakers, they want to make their mark, to move the family business forward and diversify. At the same time they are experiencing more challenges - both inside the business and in the wider business landscape.’
According to the research, 88% of those surveyed want to do something special with the business, not just bigger but more international, more diversified and more modern. Over half (60%) say they will take the business into new geographical markets and almost 70% intend to bring in experienced non-family managers to help modernise and professionalise the workplace.
PwC says the survey findings show a focus on how to prepare for senior roles and create the right career path - 70% of next gens have worked outside the family business to gain experience.
However, despite their growing confidence and clear ideas of where they want to take the business, these next gens still experience a strong ‘pull from the past’.
While their aim is for a revolution, PwC says it is currently more of an evolution, with 40% confessing to some degree of frustration in trying to get new ideas accepted by the current generation and 52% worrying they will need to spend more time managing family politics.
The survey identified some tension between respecting the processes (and the products) of the past, and seizing the opportunities the next generation see for the future. For instance, 59% of next gens would like to diversify their product portfolio, but 68% believe their business is unlikely to make this change, even a decade ahead.
Many next gens struggle to convince their parents that the firm needs to do more on digital. Only 41% believe their firm has a strategy fit for the digital world and 29% believe that family businesses are slower than other types of business to keep up with new technology. Only half has ever discussed the threat of digital disruption at board level.
Succession is still a worry for those taking over a family business, while 61% believe that it will be difficult for the current generation to fully let go when they hand over the reins.
PwC’s report, Great Expectations: The next generation of family business leaders, is here