In this podcast, we talk about the key challenges next-generation family members face and how next-gens can enhance credibility, overcome intergenerational animosity, and establish their own independent professional reputations.
Jordan: So, Luke, we’re here to talk about next-generation members, and I think we want to split it into three parts.
One: what are the biggest challenges that they face? Two: what are their priorities. And thirdly, I want to bring in some examples of some of the next gens that we’ve supported.
Now, for me, the biggest challenge that the next gens face is the credibility question. To me, unfairly I think, many next-generation family members — especially if they’re part of a quite well-known family or in the second generation — are sometimes mischaracterised as unprofessional, inept, and potentially there’s an accusation that they don’t really add much to the business, that they’re only in the position that they’re in because of their name or their position in the family.
So I think the biggest problem that next-gen members face is pushing back against these misapprehensions about their credibility, and definitely their professional credibility.
And of course, that gets into all questions around, how do you ensure that when people search them, or read about them, or research them, they come away with this sense that actually this is an individual who’s got something to add to the business, who’s interesting, who’s credible, and has a strong reputation in and of their own right outside of the family name?
That, to me, is what I think is the biggest challenge facing next gens. What do you think it is?
Next-gen members: Key challenges
Luke: I think often that they’ll be defined by their last name and be defined by the previous generation, and I imagine that can be quite frustrating.
Also, I think probably what’s quite frustrating for them is that they usually have a unique insight that they bring to the business — and that’s working on the presumption that they’re actually involved in the family business because a lot of next-gen members actually go on to take an active role in the family trust.
They might not necessarily be involved in the day to day business, and they might also not necessarily ditch the family, but move and create their own path and go into a different world, or a different career or whatever it might be.
So even if they do that, often they’ll be defined by their family name. That’s obviously a real problem, but they need to find ways to create their own unique reputation that’s different, but also aligned with the family’s wider reputation as well.
Jordan: When I was preparing for this conversation, I was thinking about the problems or challenges that next gens uniquely face. A next-gen in my head — not always — is someone under the age of 35. Now, of course, next gens can go all the way up to 60, but in my head, I’ve got a next-gen as someone who's 35.
These are people who, by and large, grew up in a digital world. Back 20 years ago, the Internet wasn’t what it was today, but it existed. They’re, in some senses, the first generation to grow up with social media at a time when they probably didn’t realise or recognise the importance and risks of things online.
I face it every day, you have a next-gen member who, after you do some digging, you find old social media accounts, old pictures of them when they were 16, old Instagram accounts where there are pictures of them on holiday with the principal of the family.
I think this is something that is a real pinch point for next-gen members — obviously for other family members as well. This isn’t only unique to next-gen members, but it’s the fact that they’re more likely to have a larger, potentially risky digital footprint. I wondered what you thought about that?
Social media: Digital risks and online privacy
Luke: I completely agree, and I find this quite interesting because we have some experience of dealing with this.
Usually, it causes quite a bit of internal conflicts between the younger generation and the older generation. The older generation typically wouldn’t be on social media. Again, I’m generalising here but they’re usually quite private individuals. Whereas the younger generation are more open to using social media.
I understand why the younger generation are on social media. Of course, all their peers will be on it as well. But the difference is, if you’re from a well-known, high profile, successful wealthy family, then there’s more interest in you from the media or from various different other quarters than there is in other families and other individuals.
So firstly, you’ve got to understand that more people will be searching for you than Joe Public. And secondly, there are ways in which to mitigate and manage things in order to reduce risks.
I just want to go back onto your previous point about credibility to understand what the facts and the statistics are from the public. So when we did our 2019 public barometer, the public was most favourable to self-made individuals, self-made families and those who have gone from nothing to generating all their wealth. Obviously, if you’re next-gen of a wealthy family then you’re inheriting that wealth and there’s more of an uphill battle for those individuals rather than the self-made individuals.
If you’re next-gen and you’ve inherited wealth, there’s a bit of an uphill battle to prove your worth, show that you’re adding value to the family business and to creating a positive reputation in the eyes of the wider public.
Then also on a completely unrelated point as well, we also know that flaunting wealth on social media is particularly damaging to an individual or even a family’s reputation. Often, that’s where there’s conflict. Because the younger generation don’t really understand the consequences of posting a picture of themselves on Instagram on their parents’ yacht, or whatever it might be.
While that might be a very enjoyable experience for them, there are consequences to putting that online — and we know that from the polling that we’ve done in the past.
Intergenerational conflict: Bridging the divides
Jordan: Something you said there brings me to the final topic that I wanted to talk about. You started talking about how first gens are sometimes a little bit anxious about some of the activity of next gens. There was the sense that — and I’m sure next gens feel this — they’re being somewhat lectured to by the first generation. That’s why I think it’s actually quite important to say that there’s a lot the first-gen can learn from the next-gen here too.
Next gens understand the power of online. Some first-gens don’t want to be online at all, and that’s not a feasible option. So bringing them in to ensure that the discussion represents as many different viewpoints as possible is important.
There are also other things you can learn from next gens. As we know from all the research you have in the public sphere, next-generation members are more mission-driven, they’re more purpose-driven. And family businesses, family offices and other entities can learn a lot from that approach. As a family business, how can we inject some purpose and mission into our business?
I wondered, Luke, whether you have an example, or you’ve supported a family where a next-gen has added value to a family business or has added value to a family office by bringing in this discussion around values, mission and purpose?
Luke: I can give you two examples actually. Actually, in this example, there was a flip of views from the other way. Again, the beauty of doing this research is it prompts really interesting discussions with clients, and particularly with multi-generational families.
We had a discussion with one client where the principal of the family was really open to doing stuff online. He was more relaxed about putting content online; websites, biographies, and so forth, and the younger generation — who were all involved in the family business — were actually a lot more reticent at doing it. They were more concerned about how their family was being perceived online.
Not just that, they were also concerned about their own privacy and whether putting more content online or doing more stuff in the media was putting their privacy at risk. I don’t think it is, by the way, depending on how you do it. But, nevertheless, interesting to show the different views there.
I’ve also worked with another family where the younger generation had created a new family business and they were just more open to putting collateral online — doing biographies, creating websites and so forth. Where typically the principal of the family is actually a lot more hesitant.
So I think it works both ways. But I agree with you that generally the next generation — who are often more internet savvy — take a particularly different view to doing things online and they understand the aspects of what you need to do in order to curate a positive online reputation.
Recommendations: Bring all perspectives to the table
Jordan: Thanks, Luke. Some interesting points there. The pinch points for next gens are credibility, digital footprint and ensuring that the next-gen has a voice in the family entities.
As we bring this to a close, I think I’d like to finish off with one recommendation. And that is that first gen, second gens, third gens and next gens, all have interesting and very diverse perspectives on how to effectively communicate about the family and the family’s business holdings.
The most important thing is to get all of the family around the table and have a candid discussion. Then, reach a conclusion on what you want to communicate and then you can move to the next stage of communicating it. But firstly get around the table.
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