I meet a lot of next-generation members of family businesses. One of the hot discussion topics is the question of whether and how they want to start in their family's business.
I owe it to my father
“I run an interesting start-up company, but I owe it to my father to take over the family business.” “My father and my mother decide everything, how can I develop the knowledge to take over later?” “Our family chairman retires soon. I want to take over however, it's pretty crowded with my cousins.”
These are just a few recent quotes that I thought were pretty bold and thought provoking. However, when talking to the older generation, their parents, I see a more relaxed attitude to ensuring that the next generation is happy. If they want to work in the company this would be great – if they decide otherwise – it's not seen as a tragedy.
In search of happiness
Nevertheless, innovative families tackle the topic by creating various totally different opportunities for meaningful activities for family members. One family for example has created distinct fields that allow family members who want to contribute to become active in an area they have an interest in and a passion for.
They understood that not everybody is born as a chief executive. So besides the family member who runs the business, there is one family member who takes care of the family money by running the family office, another one is in charge of organising the training programmes for the next generation, and again another one runs the family's philanthropic activities.
The different fields are treated as of equal importance to the family that has adopted the “family first” principle which looks at the business as a means to generate revenue to fulfil the dreams of the family members.
Defining roles is crucial
However, in most families, it is still the “business first” principle that is applied. Business is business and family is family. I think there is no right or wrong in this respect, but it is important to choose the principle and then apply it consistently somehow.
Also with the business first principle it is critical to define the roles of the family members. Who can work in the company? Who leads the company? Who acts as responsible shareholder? Clarity of roles and related duties, as well as innovative and open-minded thinking, can help family members really see their family's business as a ticket to freedom.
Henry Hirzel • Senior Adviser - Family, Business and Wealth, UBS Wealth Management