Hurdles ahead for next generation of family business

PwC’s survey “Great expectations: The next generation of family business leaders” polled 268 members of family-run enterprises who were likely to take over businesses in 31 countries.
It shows that 60 per cent would take the business into new geographic markets. They are exploring new ideas, new products, and even new business models. At the same time, next gens are experiencing more challenges, both inside the firm and in the wider business landscape.
Family has always been at the heart of business, and remains a vital part of the world economy – accounting for 70-90 per cent of global gross domestic product. In the next five years, 40 per cent of family businesses globally will prepare to hand over the reins to a new generation.
Sira Intarakumthornchai, CEO of PwC Thailand, said that the next gens were no longer taking roles in the family business simply because they were a child of the boss.
“Next gens now have stronger beliefs and are confident that they can change the business for the better,” he said. “They care more about future success.”
This year, 92 per cent of next gens feel a responsibility to hand over a sound business to the generation after them. Some 88 per cent want to do something special with the business – not just make it bigger and stronger but more international, more diversified and modern.
“The readiness of the next gens is a positive sign for the family firm. However, the challenge is whether these family firms are ready to reinvent themselves to support and respect the opportunities the next gens foresee for the business,” Sira said.
The survey found that next gens’ confidence has risen and their preparation for senior roles has improved. Some 70 per cent have also worked outside the family firm to gain experience.
To grow the family business further, 69 per cent would bring in experienced non-family managers to help modernise the workplace, while 59 per cent want to diversify its products and services. Even so, 68 per cent believe their firm is unlikely to make this change, even a decade from now.
Family politics is one of the top concerns of next gens, with 52 per cent (up from 36 per cent in 2014) saying they’re worried that they will need to spend time managing it.
On top of that, digital is an area where a generation gap still lingers. Next gens often struggle to convince their parents that a firm needs to adopt and adapt to digital technology. Some 41 per cent of them believe that family firms are slower than other types of business to keep up with new technology. Next gens are still concerned about managing the succession process successfully. They are seeking the best way to ensure that their parents still feel involved and able to contribute while making the transition to a more passive role.