When it comes to a big concern for next generation members of family businesses, the lack of a digital strategy for their businesses comes way up there. That’s according to a new study from PWC.
PWC polled more than 250 next generation members of family businesses from around the world and found that only 41% of them reckon that their firm has a strategy fit for the digital world. And 40% admit to some degree of frustration in trying to get new ideas accepted by the current generation. Also, more than half of respondents are worried that they will need to spend time managing family politics
“Digital is an obvious area where a generation gap still lingers,” says Henrik Steinbrecher, PwC global middle market leader. Many next gens struggle to convince their parents that the firm needs to do more on digital. Only 41% believe their firm has a strategy fit for the digital world and 29% believe that family firms are slower than other types of business to keep up with new technology.”
The research also found three things that could undermine a transition from one generation to the next. These were:
- Generation gap: the current generation is not always confident that their children are ready and able to take over.
- Credibility gap: The next generation say they have to work harder than others in the firm to prove themselves.
- Communications gap: Family businesses have to manage personal as well as professional relationships, and this brings with it the possibility of conflict.
Since the last study was done in 2014, PWC found that next gens’ confidence has risen, their horizons have widened, and their preparation for senior roles has improved. For instance, 70% have worked outside the family firm to gain useful experience and bridge the credibility gap before joining the family business.
Survey respondents say they want to be more than just “caretakers”: they also want to leave their stamp on the business and are not timid about bringing in outside help to achieve their goals. Nearly 70% would bring in experienced non-family managers to help modernise/professionalise the business.
“Another trend we’re observing in our work with family firms is that many talented next gens are becoming much more selective about the role they take on,” says Steinbrecher. “They want a job that match their skills, and where they can excel. 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.”