Every August, British newspapers are full of pictures of smiling young people, jumping for joy with hands clutched around a piece of paper.
In the accompanying articles, the students, who’ve just received their A-level results - the final set of secondary education exams in the UK - outline their plans for the future. “It’s medicine at Durham University for me”, or “I’m doing law at Oxford”, they say, setting out on the same career path as their parents, or carving out their own niche.
But what happens when you plan to join the family business? Is it worth getting a degree or are family members better off jumping straight into the business?
For some, like Sir Anthony Bamford, the billionaire chairman at JC Bamford (better known as JCB), joining the family business was the preferred option. He succeeded his father, Joseph Cyril Bamford, as chairman and managing director of JCB in 1975. Before this, he opted for an apprenticeship, which was “very important” for his future success, according to Philip Beresford.
Beresford composed the recent City & Guilds Vocational Rich List, which looked at the UK’s richest people who have undertaken an apprenticeship or practical qualification, rather than a university degree. Bamford topped this list, thanks to his £2.15 billion fortune and his time as an engineering apprentice.
In contrast to an academic education, the practical mechanical engineering experience he gained as an apprentice helped Bamford to cement his position at JCB.
“He could look his engineers and managers in the eye as someone who was qualified to lead them not just by virtue of his birth but because he had the [practical] qualification too,” said Beresford, who is better known for compiling the annual Sunday Times Rich List.
Degrees, MBAs and foreign languages
Sandy Loder, one of the 200-plus decendents of one of the UK’s most famous banking dynasties, Robert Fleming & Co, decided neither working in the family business nor going to university was the best option, at least initially.
Instead, when he was 19, he joined the army and trained as an officer, spending time in Northern Ireland, London, Cyprus and Sierra Leone.
He admits doing everything he could to avoid joining the family firm, but finally succumbed when he was 26. This approach might not be the best way to go about it, said Loder.
“I don’t think a degree is essential. Not many degrees bring much value-added to the business,” he said, suggesting instead that he would have been better prepared to join Flemings if he had spent at least five years gaining banking experience before returning to the family business.
In contrast, Dr Ritch Sorenson, Opus endowed chair in family business and academic director of the Family Business Center at the US’s University of St Thomas, reckons having a degree is advantageous for family members and said they should aim to tailor their education to their interests and the needs of the business.
“For businesses that want to professionalise, which is true of most multi-generational businesses, education is very important,” he said.
Carmen Lence from NextGen Consulting & Coaching reckons family members shouldn’t just stop at a degree – they should also aim to get an MBA and learn a foreign language.
“We are in an increasingly competitive world [that is] becoming more and more global. Your family business is going to be competing with other business run by very well-prepared managers; you have to be at least as good as they are to survive,” she said.
Having additional qualifications will also help ensure that the next-generation member has the capacity to find a job outside the family business if he or she needs to, said Lence. “If you have no degree and your work experience is limited to your family business, it will be very difficult to prove to a recruiter how good you really are.”
Work experience outside of the family business
Like Loder, Sorenson and Lence reckon that before joining the family business, whether from school or university, family members should work outside of their own company for a while. “Most families I know want their children to both obtain a university degree and to get work experience outside the family business - another form of education - before they work for the business,” Sorenson said.
Getting work with a competitor, a supplier or a customer is a good idea, said Loder, who now advises next-gens through his company AH Loder Advisers. He believes young people often aren’t aware of the different ways of running a company and those who only experience their own family business model may miss out on “important methodologies” that could help the firm.
“Get as much experience as you can and make mistakes outside of the family firm, then join post-30 as a director who is able to take the business forward,” he said.
However, even with relevant work experience, a top-notch degree and the ability to speak a foreign language, next generation members may not be cut out for the family business. “You may be very, very bright … but may not have to skill to run a family business. It is about so much more than brainpower, though that helps,” said Beresford.
Instead, there are other traits and skills that a person needs, he said. As well as having a keen interest in the business from a young age, family members need to learn from their parents, accept advice and criticism, think long term, understand the importance of succession planning and regard building the business as the biggest priority in one’s life, Beresford said.
“It is a very tough calling to do it well,” he said. “But the huge satisfaction that comes from running a well-oiled machine where everyone is pulling together and making good profits which you can see spreading throughout the local community in the shape of good wages and strong employment in the business - that makes it all worth while but it is also an awesome challenge to stay at that peak.”