The NextGen Wants to Be Heard

In the coming decade, the greatest intergenerational wealth transfer in history is poised to take place. By 2030, control of roughly $15 trillion USD will transfer to the next generation. A significant portion of that wealth will go to the successors of the world’s major family enterprises.

These rising decision-makers are motivated, passionate, and driven; they have a strong desire to carry forward their family’s legacy. At the same time, they also want to have a voice in shaping that legacy—and their unique views and perspectives can sometimes differ from those of the current generation of family leaders.

The good news is that, for an overwhelming majority of NextGen successors, family is the most important thing, and they value their close family relationships. But close family ties don’t automatically lead to open, honest communication, which is essential for building a sense of unity and shared purpose.

Being in touch and having worked closely with global families and their NextGen successors over decades, we condensed our learnings into three strategic methods that can help keep the lines of intergenerational communication open and productive.

1. Include the next generation in family decision-making

NextGen, whether they work in the family business or pursue other careers outside the family turf, want to have an active role in managing their family’s wealth and shaping its legacy.

Yet they are often frustrated by the lack of meaningful communication with their parents and other family leaders about their future roles in the family business: 30% said that their families had never even discussed their plans and expectations with them.

Lack of insight into crucial matters in the family enterprise—business goals, investment strategies, succession plans—limits the next generation’s contributions and hampers their ability to chart a course for their futures.

Professor Randel S. Carlock Professor in Entrepreneurial Leadership; Founding Director, Wendel International Centre for Family Enterprise at INSEAD, says sharing essential information with the next generation and allowing them to have a voice in the decision-making process is crucial for the long-term success of the family. Not only does it strengthen family relationships, but it also broadens the family’s impact, reinforces shared values, and helps ensure continuity for the future.

“The only means to improve the way a family functions is to develop new perspectives to support it as it grows and evolves,” he said. NextGen leaders are uniquely positioned to bring that new perspective and energy to the decision-making process, but only if their views and insights are intentionally made part of the conversation. It’s in the family’s best interests for senior leaders to formalize a process to make it happen.

Spotlight on the Tavares de Melo Family²

The Tavares de Melo family, one of Brazil’s leading entrepreneurial families, includes six branches and over 100 multigenerational family members. The current NextGen leaders represent the fourth generation involved in the family business.
The family formed a Next Generation committee with representatives from each of the six branches to ensure that the interests, needs, and perspectives of the successor generations would be heard.

The committee members have non-voting seats on the Family Board, but the arrangement allows them to participate in the decision-making and succession planning processes. The family also launched a Legacy Program to help the fourth-generation leaders ensure their core values carry forward to future generations.

2. Keep an open mind

The willingness and ability to speak openly and honestly about important matters is critical to family continuity. These conversations, especially between current and NextGen leaders, will often expose differing viewpoints and opinions about careers, operation and control of the company, and the use of family capital.

Approaching discussions with an open mind allows everyone to find common ground, and from there, develop innovative solutions. It is helpful to start by understanding what each family member sees as the problem to be solved and then be willing to listen to different approaches for solving it.

Viola Steinhoff Werner, Head of the Global NextGen and Families Department at Credit Suisse, Founder of the Young Investors Organization (YIO) and Family Institute (The FI) says that “asking the big questions can be scary, but if you turn away from them, you run the risk of missing out on compelling opportunities. Because these rising generations dare to do things differently and test both themselves and the status quo, I believe they are destined to create lasting impact for the good of their families and society and leave behind an enduring legacy.”

Spotlight on the Rustandy family³

Tandean Rustandy is the founder and CEO of Arwana, Indonesia’s largest ceramic tile producer. His son Febyan is head of the newly created Marketing and Communications department, a division he conceptualized and helped to establish based on his knowledge and expertise in the field.

Father and son were aligned on their vision for Arwana, but Febyan felt they could do more to expand the business using his passion for marketing and technology. Understanding that he needed to prove the value of a marketing department before carving out a new role for himself in leadership, Febyan worked within the corporate structure to launch several successful marketing initiatives, which ultimately grew the customer base and expanded the export side of the business.

Reflecting on Febyan’s success, Tandean said, “I recognize that I can learn from Millennials like Febyan about technology and how it can be used for the good of the business.”

3. Make the implicit explicit

Everyone involved in a family enterprise has assumptions about the future. Difficulties can arise, however, when they are left unsaid—especially when the aspirations and beliefs of the parent generation don’t align with those of the next generation.

Our Global Next Generation Report revealed that most NextGen members have a deep desire to grow and expand their family business and protect the family legacy. At the same time, they want to prove their worth, either through an independent career or by forging a new path within the family business. But they are often kept in the dark about their parents’ expectations and unspoken assumptions.

The succession planning process helps families uncover and discuss implicit assumptions and make them explicit in a way that preserves the family’s legacy. It’s the number-one concern among NextGen leaders, and with good reason: 70% of current family business leaders do not have a succession plan in place.

Planning a successful transition from the current generation to the next is a critical part of ensuring continuity for the family enterprise. These conversations should begin early and happen on a regular basis to ensure the succession plan supports the goals and aspirations of both the parent and next-generation family members.
Thomas Ang, Head of Global Family Office Services at Credit Suisse says, “Learning by doing is very often the best way to find out if the plan works or not, and for the family and the individual to better understand themselves and each other. Opportunities should be created for the next generation to put theory into action. It is entirely possible to start with something small. Without implementation and practice, the best plan can be ruined when it finally comes down to it.”

Starting the conversation

You don’t need a script to discuss important issues with your family members. As Viola Steinhoff Werner says, a good way to start is by asking the big questions—and then being prepared to listen to the answers. Approach the conversations with humility and with the recognition that some discomfort is natural.

“Even with the best intentions, parents and senior family members frequently fail as communicators because they rush to offer solutions to problems instead of listening to what the other family members have to say and being supportive of them,” says Professor Carlock. Conversation is a give-and-take, a sharing of ideas. It doesn’t always have to be about solving an immediate problem.

The important thing to keep in mind is that regular, ongoing, open communication is the only way to ensure your family legacy is protected and its vision and purpose are carried forward.

Source:

^{1, 2, 3} Global NextGen Report “Creating a world with the Next Generation and their families”