Family businesses are a significant contributor to the U.S. economy, with Deloitte’s 2024 Family Enterprise Survey revealing that they generate $7.7 trillion annually in GDP and employ over 83 million people. However, managing these enterprises across generations presents unique challenges. The survey delves into the differing perspectives between current and next-generation leaders, exploring their experiences, perceptions, and plans to provide insights into navigating generational differences for long-term success.
One key insight from the survey is the difference in experiences between current and next-gen leaders. While current generation leaders have deep operational knowledge gained from building their careers within the family business, next-gen leaders bring diverse experiences from outside the enterprise. These external experiences are valued for introducing fresh perspectives and potential growth opportunities, with 51% of next-gen respondents expecting to be involved in senior management compared to 48% of current-gen leaders who have only worked within the family business.
Significant differences in perception and plans for the business are highlighted in the survey. Current generation leaders are more likely to believe that the next generation has a high level of participation in decision-making. A notable portion of next-gen leaders are considering selling the business, indicating a potential shift in priorities. Open, transparent communication is essential to bridge these perception gaps and align on a shared vision for the enterprise’s future.
Trust emerges as a critical component of successful family businesses, with disparities in trust levels between generations revealed in areas such as business direction, IT processes, and mergers and acquisitions activities. Building trust involves recognizing and valuing the competencies each generation brings, such as next-gen leaders feeling confident that the current generation trusts their knowledge in sales, marketing, and business development. Embracing technology for growth is also crucial, with generational differences in emphasis on digital transformation and cybersecurity. Despite these differences, both generations agree on the necessity of technology and digital transformation as essential competencies for future leaders.
The survey discusses varied risk perceptions between generations, with the current generation more concerned about challenges such as hiring, climate change, and capital structure. Understanding and addressing these divergent views is essential for effective risk management and leadership succession. Succession planning, in particular, emerges as a critical area where generational differences are pronounced, with only 24% of current generation leaders believing their business would run smoothly without a key family member compared to 13% of next-gen leaders. Effective succession planning involves clear communication, robust governance structures, and actively engaging the next generation in strategic roles.
In conclusion, Deloitte’s 2024 Family Enterprise Survey emphasizes the importance of communication, trust, and innovation in managing multigenerational family businesses. By leveraging diverse experiences, aligning on a shared vision, and prioritizing technology and succession planning, family enterprises can navigate generational differences and foster long-term success. Addressing these disparities through open communication and strategic planning can help family enterprises thrive across generations and prepare for future challenges.
