The FT talks about the need for inviting the nextgen into family businesses. It has some interesting feedback on how to invite the nextgen in, the need for not having competition and egos, and the need for getting these next generation on your side.
Faced with the great opportunities that this new generation has, and the fact that the legacy businesses may not offer the same level of opportunities, it makes it even more important to consider this very very carefully.
EY has shown in its report last year, in a global study that less than 7% want to join the family business. This is an alarming figure and the founder generations need to pay attention to this if they want to see perpetuity of the family business, or make alternate plans, like sell off or hand it over to professionals to run. But having the next generation on your side, becomes imperative.
In the ET dated 9th June, 2016, the story of Raymond turning around is an insightful article. It talks about how a family business having a well known brand which was declining in profits. The family stepped aside and brought in a professional manager to run the company. What is interesting is, that the family also empowered him to take decisions which included selling off some divisions, and even reducing staff! Not the easiest decisions to agree on. The company has turned around successfully in two years time, the article goes on to state.
This brings out a very important aspect in family businesses, which the inheriting generations can pay attention to. It is important to realize, that just because there is a family business, does not mean that a family member has to run it. Families and businesses are two different systems and each has its own rules. Families are sometimes bound by the notion that the family membership entitles a family member to be a part of the business, and the next generation should and must join, regardless of qualification or capabilities. This is a very dangerous precedent and could lead to disastrous consequences, and could put the business at risk. Additionally, there should be maturity in the family to realize that if the business can be run by some else, then it is best to step down in favor of this person. A business should be run as a business. this is the only way, a business can thrive and subsequently support the family.