For our survey, we talked to over 250 next gens across the world, from those just starting as trainees in the family firm, to those at board level with more than a decade of experience behind them. Just under half of the respondents had always planned to work for the family firm, and this figure hasn’t changed since the last survey. What has changed, however, is how they’re going about doing that.
In our 2014 survey we talked a lot about the value of working outside the family firm, both to gain useful experience and bridge the credibility gap, and it’s interesting to see that 70% of the next gens we spoke to this year have done this at some point before they joined the family firm. In many cases this is encouraged by their parents as part of a structured development plan - 43% of the respondents who worked for another company before joining the family business did so with this in mind.
As Paul Hennessy, Leader of PwC’s Family Business Services in Ireland says, “working in another company can give next gens valuable experience, and it can also help them develop what we often call ‘non-family objectivity’ – in other words, a more objective view of the challenges their own family firm is facing, which is really hard to achieve for those who have been in the business a long time.”
“Being a member of the family, you can sometimes lack objectivity, and the risk then is that you are led too much by the heart and not enough by the head. You have to be analytical, and you have to be objective, so you make the right investments and decisions for the business, not just for the family.”
From our work with next gens, we’re also aware that a growing number are doing a short spell in the family business, usually immediately after university, followed by a longer stint elsewhere, before finally returning to the firm. As Jonathan Flack, PwC’s US Family Business Leader, observes, “This can give next gens the best of both worlds: they gain a sense of what working for the family business will be like in practice, from its culture and environment to the strategies and issues it faces. They can then use that insight to ensure they get the right sort of experience in another role elsewhere, and develop the specific skills the family firm really needs.”
This is another trend we’re observing in our work with family firms: many talented next gens are becoming much more selective about the role they take on. And this is where the first of the four critical success factors come in: skills: they want a job. They want a job which matches their skills, and where they can excel: they don’t want to take a role (even a senior role) simply to ‘make up the numbers’, especially if it’s in an area where they know someone else would do a better job. In other words, they have a deeper and more nuanced understanding of what running the family firm is going to mean in the coming years, and they’re asking themselves what they have to offer that would help take the business forward. This is leading them to demand a much clearer career path at a much earlier stage. This demand for clarity is a very real issue and perhaps shows itself in the fact that fewer next gens feel they have a clear career path in this year’s survey than in 2014 (44% compared to 50%). But it’s impossible to underestimate how valuable this can be. Christian Weber, CEO of the fifth-generation Karlsberg Brauerei, a brewing company based in Germany, is a great example: he took a very sophisticated methodical approach to career planning, drawing up his own personal development proposal to present to his father, and that careful preparation has really paid off. You can read Christian’s full story here.
Christian’s story also reflects another trend we’re seeing: a much greater acceptance of the value of career planning from some of the current generation. Paul Hennessy, Leader of PwC’s Family Business Services in Ireland, has certainly seen this: “The current gen may have been expected to ‘muddle through’ when they joined the firm, but many of them want something more structured and supportive for their children.”
Another important trend is the increase in the number of next gens attending directors’ meetings long before they have a formal seat on the board – 80% of our respondents attend board meetings and many are doing so to ‘watch and listen’, so they can get an understanding not just of the company’s issues, but of how boards work, and governance in practice. This will be especially valuable to those still in junior or middle management roles. Networking is another really useful way to build confidence and develop personal and ‘softer skills’: "When it comes to career planning,” says Clare Stirzaker, PwC's UK Family Governance specialist, “we find that families want their next gen to better understand the world of business by joining external network groups. Gaining perspectives from others and building a network of their peers can be a really effective way to learn and contribute to their family business."
“I have good ‘hard’ knowledge in finance, business, and the law, but I could probably do with more soft skills.”
In other respects, the challenges of being a next gen have not changed much – and have probably always been a feature of this particular business model.
Many next gens feel they have to work harder than other people to prove themselves – it’s another example of the ‘credibility gap’, and one which can actually get more acute as next gens rise through the ranks.
“One of the biggest challenges that I faced was earning the respect of other people. A lot of people might think ‘You’re only here because your dad’s the boss’, and while that might be true in terms of getting the job in the first place, once you’re in the role you have to work three times harder than anybody else because the spotlight is always on you. And other people don’t see the hours that we put in outside the office, they don’t see us working weekends.”
Gavin Symes, Executive Director, Credit Repair Australia
“It will be hard to lead my colleagues. Especially those who have been here for years. They will need to look at me in a different light.”
“When we changed one of the company's systems it was an uphill battle for the majority of the change process. The way in which it was handled wasn't the way I felt it should have been handled and eventually it became apparent that I was, in fact, correct; I couldn't express how I really felt on that occasion as the nature of the company doesn't really allow me to do so.”
Aged 34, 3rd-generation family business, Brazil
In many cases it’s not just their fellow employees the next gen need to convince, but members of their immediate and wider family as well. This tension between the personal and the professional is tough, and the same issue plays out at a family level, as well as for individuals. Over 90% of the next gens we spoke to have or expect to take on a governance role in the business one day, and many are taking courses to learn what professional ownership entails. But it isn’t just about business governance: next gens who are hoping to run the business one day know they will need to professionalise the way the family governs itself too, as part of that task.