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Next-gens keen to employ non-family members, says report

By Daniel Bardsley

Next-generation members of family businesses are increasingly recognising the importance of installing outsiders in senior roles, according to a report.

Although nine out of ten next gens have, or expect to have, a governance role themselves in the business, many believe an external hire may be able to contribute more, according to PwC's Great Expectations: The Next Generation of Family Business Leaders.

The study found that 90% of next gens thought it was good to have non-family members in key positions − up 10 percentage points from two years ago.

Also, 69% want to bring in experienced non-family managers to modernise or professionalise the business. Reflecting this, Jakub Dzik, whose father founded Impel, an outsourcing group that is one of Poland's largest employers, said though he “would love” to run the business himself, this might not be the ideal outcome.

“I would accept it if there came a time when an external professional was the best option for the business, and in those circumstances, I'd like to take a role on the supervisory board,” he said.

Among next gens who do not foresee themselves running the company, 83% expect the family firm to bring in non-family professional management.

Striking a cautionary note on the role of outsiders, Paul Hennessy, leader of PwC's family business services in Ireland, said in the report that transitioning to a situation where non-family managers are in charge was “harder than most family businesses expect”.

“A lot of them are enthusiastic about starting the process, but become less so when they realise the full implications down the line. That in itself can create tensions and conflicts,” he said.

In another indication of the receptiveness of next gens to change, 58% said family businesses reinvent themselves with each generation. Yet just 31% thought family businesses took more risks than other types of firm, perhaps highlighting a tension between the desire of next gens to see change, and the difficulty of effecting it. Tying in with this, 40% of respondents experienced frustration at getting the current generation to accept new ideas such as the importance of adapting to the digital world.

Based on responses from 268 next-gen family members, the report also found that 88% of next gens felt they had to work harder to prove themselves because they came from the family that controlled the business. In order to gain wider experience and develop “non-family objectivity”, 70% had worked outside the family business.

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