Managing Intergenerational Differences in Family-Led Businesses

One of the best features of a family business is that family members are fully vested in the company’s success and have a strong commitment to helping each other succeed. They promote ethical practices, are committed to their work, and desire to build and grow a family enterprise that will endure for generations.

During our Utech leadership development workshops, we have the pleasure of helping family members leverage the values and goals that bind family members together as a platform for entrepreneurial decision-making and team leadership. We do this by focusing on improving communication between family members within the business context.

It is exciting when new generations of family members join the company and when succession is addressed. It means the business is resilient and thriving. A key to ensuring this remains true is recognizing, respecting, and utilizing, when appropriate, the unique perspectives and talents of the younger family members while folding them into the current business. Of course, sometimes there are differences in perspectives to reconcile, but successful family-led businesses learn to communicate transparently, sharing ideas and working through differences.

Positives of a Family Business

To manage intergenerational differences, first step back and recall the positives that make your multigenerational family business unique.

• Diverse family perspectives keep the business “fresh” and open to innovation. Generations bring unique ideas and experiences to the table, enabling the firm to better adapt to market trends and social changes. This diversity leads to more creative problem-solving and a deeper understanding of the evolving market landscape.
• New perspectives on roles and responsibilities improve operations and competitiveness.
• Family members are committed to the business out of a sense of responsibility and shared ownership.
• The leadership structure is stable because family members are invested in the company’s future.
• Older family members share valuable expertise and industry knowledge with younger family members. However, they can also pass down the values, ethics, and goals crucial to business success.
• Decision-making is more agile and flexible because family businesses are usually less bureaucratic than non-family businesses.
• There is a strong sense of shared purpose.

These are the features of a family business and relationships to develop and nurture for long-term success. Marina Vaughan Spitzy is the Director and Founder of the Austrian fifth-generation family enterprise Tecolate Advisory, which works with multigenerational families on shared wealth ownership. She said, “Intentionality is vital. It is extremely helpful for families to intentionally build up their skills, to intentionally talk about what values are important to them and why they’ve chosen the business they have. That’s the thread that connects different generations to each other.”

The key phrase in that quote are “intentionally talk.”

Family members are at risk of neglecting the need for thoughtful relationship-building because they are family. They know each other well. Right? However, they may know each other as family members but are uncertain about integrating the multigenerational family connections with the business as a profit-maker. Utech consultants have found that some clients seek out the leadership development and team-building opportunities we provide because family members need an objective assessment of their leadership skills and skills gaps and the impact of family relationships on the business.

Of course, just because it is a family business does not mean there are never any differences among family members. Utech Group consultants have worked with many family-led businesses that struggle with managing intergenerational differences, especially as younger family members join the company. The new members may bring fresh but unpopular perspectives, see their roles and responsibilities differently than older members, make their assumptions about decision-making authority, and sometimes, bring expectations concerning their place in the succession plan. There may be varying work styles, leadership strategies, and communication preferences.

While some differences may not seem reasonable to the founder or older family members, there may be differences that can be embraced to benefit the business and family relationships. There is no way to know if you do not talk about them.

“Let’s Talk About It and I’ll Listen”

In a family-led business, differences and conflicts often arise due to overlapping roles, emotional connections, and varying visions for the company. Better communication can play a vital role in resolving these differences by fostering understanding, reducing tensions, and promoting collaboration. How do older family members encourage younger family members to bring their invigorating differences and avoid suppressing their enthusiasm and creativity while keeping the business headed in the right direction for long-term growth?

Leaders across generations need to develop listening intelligence. Listening intelligence is the ability to actively listen, understand, and empathize with the speaker’s perspective. The Utech Group utilizes the ECHO Listening Profile to identify individual listening habits for a very good reason. It is not enough for two or more people to talk to others if the person or people they are talking to are not actively listening. Everyone has a listening style that filters information. In fact, it is common for people to be constructing a response while the other person is talking. It is an exclusionary process because the listener is busy reaffirming personal perspectives, beliefs, and biases rather than constructively considering what the other person is saying with an open, empathetic mind.

The Utech Group custom leadership development approach helps leaders identify the differences holding their company back from achieving the most success and works through the communication challenges at the root of the intergenerational differences. Sometimes, it might be difficult for family members to resolve differences independently because they cannot be objective. Good communication can include acknowledging when outside help, like a Utech consultant, is necessary. A neutral third party can provide fresh perspectives and help navigate difficult conversations.

The Utech Group offers onsite and offsite leadership development opportunities that can be customized to meet your needs. Contact us today to discuss how we can utilize our experience and expertise to benefit your family-led business.