Governance and getting the next generation involved?

Where families do not want the next generation to work in the business (aside from school/ university holiday placements), those people grow up to develop their own careers as, for example, bankers, doctors, architects etc. The business may be there in the background and it may pay for education, but any details of governance are often of little interest. A different approach is therefore required to ensure their future involvement and support.

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We asked one participant, ‘How do you measure success in a family business?’ It was clear that the involvement of the next generation was vitally important in sustaining the long-term values as the basis of an enduring business.

“If you want anything to last you have to fully engage the next generation. To kick start a new process, make sure the next gen is at the table because they are the custodians of the future.”

It became clear in our participant interviews, particularly where the families were larger, that meetings were not just important from the business side, but also from the social side as well. With a number of families spread out across the world, the geographical and professional disparity meant the social side was key. This was more pronounced in the ongoing quest to engage younger generations.

There was a clear theme, that pursuing focused philanthropic goals and bringing people together socially were complementary ‘companion’ initiatives that were likely to enhance the likelihood of maintaining future generations’ involvement.

We found an illuminating correlation where, with family meetings that had a strong social element, the family was generally inclined to see the constitution as flexible and have a positive reaction to supporting its content. Furthermore, for some families this related to building a sense of a family brand, especially for those that lacked the starting point of a product or name of a family company.

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Rupert Phelps

Partner, Family Wealth Group

Family Wealth Group
London

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