Millennials in Family Businesses
Millennials are the generation that was born and raised in an era dominated by new technologies, thus they possess superior skills in that area to those who preceded them. Even though this is a competitive advantage, the governing generation in the family business does not perceive it that way, and so they do not usually integrate the younger members of the family in the decision making process.
From that premise, Ferran Fisas and Lisa Morel, from Exaudi Family Business Consulting, affirm that this is one of the biggest challenges that family business have today, because many entrepreneurs consider that the transfer from one generation to the next must be made in the same way that was used before.
“My children are useless, they are worthless. I have heard that from entrepreneurs who curiously do not know how to use a smartphone. Then you think: your children do not have a problem, you do. They tend to think that the skills required for the future are the same they have now, and this is not true”, Fisas says.
According to the expert, millennials are the ones who have to govern the companies of the future, and their potential is not recognized. “My job is to make the governing generations see that they need to incorporate the new generations, precisely because they are much closer to the future”.
Mr. Fisas states that families who do it well begin to work on that goal since children are 4 years old, and form them with that vision, because they have the ability to hand over to new generations and the humbleness to listen to their children and recognize that have skills that they will never develop. Although he recognizes that to do so, generosity and humbleness are a must, and not everyone possesses those two qualities.
However, there are other factors of influence so that children do not get involved in the family business. Some of them visualize their parents’ work as a curse, this usually happens with the second generation, because the father or the mother dedicates all their time to the business and to generate wealth, and they are absent in the home.
“Their nature is more of a provider, they provide to their children but they are not present, and children tend to visualize the business as the enemy”, Mr. Fisas points out.
Many times the opinion of the wife contributes, when she mentions how she misses the father of her children, and the business issues are taken home, where only the negative is heard.
There are also cases of very wealthy entrepreneur, who live with a very high level of comfort, and that results in their children not being able to do anything by themselves and to be afraid, and infantilism to be a characteristic of the family.
According to Mr. Fisas, in the United States a trend was originated during the 80’s and many books on the subject were published. They stated that future heirs should be empowered, to attend the best universities and return to the family business after acquiring experience in other companies.
At that time it seemed the right thing to do, but the real result is that now there are thousands of “orphan” businesses, because those children do not return. They are working in multinationals and have exceptional career plans, with salaries that their parents cannot pay them within the family business.
That is why Mr. Fisas maintains that this method does not work and that children must be empowered at home and let them acquire external experience in a different way, “because otherwise is a suicide; which is what has happened many times, there are thousands of businesses with that problem, and they have no heirs”.
In that sense, Lisa Morel points out that 90% of the reasons why there is no generational change nor sustainability from the third generation on, have nothing to do with changes in the market or the economic situation. “They have to do exclusively with communication issues or family conflicts, that is one of the great challenges they face”.
Ms. Morel adds that family issues must be separated of the business issues, and that a management system must be created that allows the best decisions to be made.
Ms. Morel highlights that in the Dominican Republic as well as other Latin American countries, the founding member is determined that his generational replacement must be his son, and that he must work operationally within the company.
“We know many families whose members are literally kidnapped by the family business and become frustrated, when there are other alternatives. The important thing is to prepare it at the government level. You do not necessarily have to work in the family business, you should work for the family business and that implies prepare the next generation, not only operationally, but to be future responsible shareholders. We are referring to a patrimony that has to do with their name, their values, their principles. It is a mass that goes beyond financial property of a business”, Ms. Morel points out.
According to Ferran Fisas, a member of an enterprising family must have three types of benefits:
Functional, usually measured in money, the income that perceives for the simple fact of being a partner of a company.
Opportunity, these are the advantages obtained by belonging to that circle and that would not exist outside of the company or outside of the family.
Emotional, each member should be proud to belong to that group.
“The entrepreneur or the enterprising family must ensure that those three benefits are perceived”, says the expert.