For families looking to create and achieve a seamless succession process, next generation engagement should start early. While patriarchs and matriarchs aim to sustain their legacies by ensuring that the next generations are poised to take the reins, it should be understood that intergenerational wealth preservation is not a one-way street.
Patriarchs and matriarchs must endeavour to engage the next generation in the family business, communicate the core values of the family business to the next generation and also encourage the next generation to take an active interest in the company on more than just a superficial level in order to ultimately achieve a seamless succession and preserve generational wealth.
There are various approaches that can be explored in engaging the next generation:
First, there is a need to have a ‘Next Gen Education Plan.’ Families need to provide the right education to the next generation. If you feel younger family members need to improve their hard and soft skills and knowledge of the business, then place a strong focus on next generation education plans to educate them further.
These could take the form of internships on family boards or in the operating business or managing an entirely independent venture or educating them in areas of development towards their soft skills. Although not every child will choose to work in the business, yet all family members who may become shareholders and whose lives may be affected by the business will without doubt benefit from understanding how the business fits into their present and future lives.
Also, family foundations and Philanthropic activities should be encouraged within the family. The millennial and Gen Z generations are interested in the idea of transformation and giving back to society. Family foundations provide an effective way to introduce the next generation to the family’s values, mission, philanthropic activities and investments. These arms of the organisation enable even the youngest family members to get involved at an early age and become increasingly involved over time.
Such programmes not only engage the next generation in activities that are naturally of interest to them, but also prepare them for the responsibilities that accompany significant wealth and continue the family’s legacy.
Hosting family retreats and getaways is another approach that can be explored in engaging the next generation. Millennials and Gen Zs value experiences and transformation. To tap into these values, families can organise retreats for the next generation that take them on a journey.
This may include various activities from exploring the origins of the family business and its values to the factors that lead to its growth. The challenges faced, how these were overcome as well as the future aspirations for the family business and family members involved may also be discussed.
These types of experiences, set in unique and memorable environments, enable the different generations to communicate, collaborate and share in an unforgettable and engaging experience and a journey that continues well beyond their return from the retreat.
Furthermore, patriarchs and matriarchs need to accept the use of software/applications and be willing to go digital. Regardless of the year they were born, the next generation is more digitally savvy than any generation before them.
Their connection to digital plays a constant part of their daily lives. Through implementing software apps in your daily operations, family patriarchs and matriarchs are able to speak in a language that the next generation understands.
The use of digital tools and software enables the next generation to enhance their interactions, communication and collaboration. Artificial intelligence and machine learning are fast becoming the norm in the business world of today and as the next generation leaders will begin to transition into the family business, they need to be equipped with agile working styles and tools from day one.
Lastly, networking is very important in engaging the next generation. Understanding that you are part of a network and fostering connection with others is quite important. Knowledge sharing events are a fundamental way to activate this network both online and offline.
Events can offer exciting and inspiring environments to learn from a variety of practitioners. In the wake of the COVID-19 pandemic, many of these events have transitioned online or operated on a hybrid model. Depending on the conference, these include everything from business and financial issues to softer factors such as sustainability, impact and purpose.
Through attending these events, families can gain best-practice tips and industry benchmarks, alongside using it as a source of inspiration. There is a saying that goes ‘we do not know what we do not know’ but by putting oneself in new situations the unknown can be explored.
Another benefit of gaining this exposure is the ability to form smaller communities based upon shared values and experiences. All of this can contribute to next generation excitement for getting more involved in various aspects of the family business. Forging these connections either virtually or physically provides an opportunity to share as well as learn.
In conclusion, next-generation engagement is fundamental in ensuring that family legacies continue well beyond the current generation and transcends generations yet to come. In order to effectively apply these approaches and get the best result, the family would need to engage the services of a Family Wealth Advisor in order to guide in creating the structures around these approaches and effectively implementing same.
Aisha is a Wealth Advisor at the Meristem Family Office.
