One common explanation for this decrease stems from the idea that next generation members are coddled to the point that they don’t understand or aren’t willing to face the difficulties and being committed to doing the hard work. Additional research also suggests that when family businesses grow beyond a certain size, the desire to protect what has been achieved leads to a more cautious and less enterprising approach. Regardless of the underlying reason, the common baseline is that successive generations become less motivated and less capable of leading the family business.

Research indicates that one of the core reasons as to why this happens is the result of a misalignment between senior and junior generations. While both generations desire the same thing i.e. a heightened enterprising spirit in the family business — senior and junior generations are unable to truly connect to get things done.

When it comes to building an enterprising spirit, a primary source of misalignment is a lack of understanding about expectations and needs. Families tend to get in comfortable communication patterns, which often creates this misalignment. Many times the senior generation feels all is fine about these matters, while the next generation members say that they are either not satisfied with how things are being handled or that they are not informed or involved or that they are not aware they have certain policies. There is only one solution to this problem: TO COMMUNICATE!

Communication alone is not enough to fully promote an enterprising spirit in the next generation. It is very common that the older generation point to a lack of motivation or drive in the next generation as the cause of a slump in enterprising spirit.

Family businesses should take advantage of these formal educational opportunities to increase the ability of the next generation to act with the correct enterprising spirit. Coupled with that is the hands-on learning. To accomplish this, next generation family members would benefit from being involved in the family business at a young age, starting from the bottom levels. The learning power of shadowing leaders, sitting in on meetings or visiting customers should not be underestimated. Besides education (both formally and hands on) the next generation also needs to be given the opportunity to lead. Next generation members need a safe space to pursue and test new ideas — to try out their entrepreneurial thinking and experiment with different solutions. Some families provide this space by setting aside resources for next-generation entrepreneurial activity. The key ingredient here is that the next generation need to be given sufficient autonomy to have a space in which they can really act.

A decline in the enterprising spirit of a family business across generations is not inevitable. Rather than focus on significant issues between generations, families should focus on correcting misalignments and communicating significantly around expectations, whilst giving priority to building an entrepreneurial ability in the next generation combined with opportunities for the next generation to act out their enterprising spirit. All this should lead the next generation to be willing to do the hard work and be fully committed to the family business. There are many differences between each generation, but an enterprising spirit does not need to be one of them.

(All factual and statistical information presented in this blog has been obtained from an extract of a blog from silvanbusinessinsights.com ) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt

At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on familybusinessact@gov.mt.