The generational gap between baby boomers and millennials involved in family businesses is widening due to megatrends such as climate change and new technologies, according to a PwC survey that assesses next gens’ attitudes to the family business.
Many baby boomers, those born in the two decades after the Second World War, are reaching retirement age and so are preparing to transition the family business to the next generation.
Bridging the gap: Handing over the family business to the next generation also found next gens feel they have to prove themselves against charges of nepotism, and many feel it will be hard for their parents to let go of the family firm.
Eighty per cent said they had “big ideas” for growth and change at the family business. These included new products or ventures, changes to where and how the company operates, investing in new technology, and exploring new approaches to marketing, such as social media.
PwC middle market leader Henrik Steinbrecher said the wide generational gap between baby boomers and millennials will make succession changes even more difficult than normal.
“The world has changed out of all recognition since the current generation took over, and the pace of change can only accelerate in response to global megatrends like demographic shifts, urbanisation, climate change and new technology."
The handover of family businesses in their first generation is most fraught, with 20% of future second-gens saying they’re not looking forward to running the business one day, compared to 8% of respondents as a whole.
The research also found 64% of next gens believe the current generation will struggle to let go of the family business, and PwC UK partner Sian Steele warned the older generation needs to be careful not to underestimate the capabilities of their children.
"Members of the current generation often comment that their children aren't sufficiently entrepreneurial and aren't prepared to put in the long hours they did to build the business; while down the hall their children are wishing their parents would embrace the possibilities of new technology, and be more receptive to new ideas,” Steele says.
"This sort of impasse can slow down decision-making, and lead to the phenomenon of the 'sticky baton', where the older generation hands over management of the firm in theory, but in practice retains complete control over everything that really matters."
Bearing the family name is not always perceived as an advantage by next gens, with 88% saying they feel they have to prove their merit to non-family members in the business. Fifty-nine per cent said this was the single biggest challenge they face.
When it came to preparing themselves for succession or management, 14% of next gens had taken a business degree, and 34% had completed a training course.