Nurturing Your Future Disruptors
31st May 2019 Hannah Harris, Family Business Leader at PwC
The next generation are the natural future disruptors of a family business and here, Hannah Harris explains why they will be the ones driving future change in family firms across the UK.
For many family businesses the time for change is when the next generation take on a senior leadership position in the business. Why wait? The next generation are the natural future disruptors of a family business, and as the pace of change increases businesses need to be more agile at disrupting themselves first. Enabling the next generation to drive change earlier, whether that is leading a digital transformation or testing a new market, surely makes business sense.
Our recent PwC Family Business survey found that although our participants clearly value their next generation, they continue to struggle with how their role in the business is evolving.
“In family businesses, you can see a huge change in the business when the next generation want to be involved because they’ve got a fresh ethos and attitude.,” explains Sarah Louise Fairburn, Brand & Sales Director, LJ Fairburn
Nearly two thirds of the UK participants in the survey have the next generation working in their family business and 71% of them plan to pass on management and/or ownership to them.
However, only 18% of UK family businesses have a robust, formalised and communicated succession plan in place (up 5% from the 2016 survey) and 48% of those with a plan have not discussed it with other family members. Without a clear plan, what will the experience of being in the family business be for the next generation and how will families navigate the changing expectations of them?
Those family business leaders who found their own transition difficult recognise starting the succession conversation early is fundamental to building a lasting legacy. While not everyone will choose to work in their family business at the start of their careers, some of the next generation may realise later on that they would like to join.
Accepting that the future workforce is likely to be more fluid and that different skills will be required, should be part of an open and regular conversation with all of the next generation about the continuity of the family business. The majority of the survey participants expect their next generation to gain experience from inside the business and it is encouraging that over two thirds also expect them to gain experience from outside the family business.
In our survey those businesses like Hobbs House Bakery and Bagnalls that have started the conversation early are also comfortable with their next generation making change happen in the family business today. Nearly half of the family businesses surveyed expect to bring in professionals from outside of the family and the business to help run it.
Part of understanding the future role of the next generation is an ongoing conversation about who can help them develop the skills they need for the future. At Owens Group , Ian Owens, second generation in the business, has been driving growth with the help of non family members who bring different views to the table.
Giving the next generation ongoing access to support and mentoring from a range of experienced individuals from both within the family and outside will help develop a strong base for future disruptors. Encouragement of the next generation should also not be limited to operational leadership roles, as many can play a valuable role from outside of their family business. At HMG Paints, Managing Director’s John Falder’s daughter is a full time barrister and acts as company secretary bringing a fresh perspective as well as legal expertise to their Board meetings.
As the head of a family business there will always be a compromise between your expectations knowing the business today and what your future business will need. Your next generation have the potential to turn that compromise into a lasting legacy. Like many aspects of family business the roles of the next generation are changing, but I am confident with the right planning and support they can become the biggest asset of family businesses.
Find out more about the PwC survey here