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By Patricia M. Soldano
Founder & President
Policy and Taxation Group

Communication is the X Factor When It Comes to Bringing Up ‘Next Gen’ Leadership

 

When it comes to the developing the next round of leaders for America’s family businesses simple communications may be the X factor in a successful transition, or a failed one.

 

In a survey just published by The Smith Family Business Initiative at Cornell University, with the help of Family Enterprise USA and The Roberts Group, the idea of communicating effectively with the Next Generation, and vice versa, came out as the one big hurdle family businesses face.

As far as I know, no one has ever asked young members of successful family businesses what challenges they face in taking over the business 10, 20, or 30 years down the road. Or, if the Next Gen understands the key issues they may face, like the elimination of Step Up in Basis, reductions in the lifetime exemption, increases in the rate of gift, estate, and GST taxes, the loss of valuation discounts, increases in income tax rates, or the establishment of a wealth tax.

The Cornell research was designed to give voice to next-generation to “better understand their concerns and attitudes towards family businesses,” according to Dann Van Der Vliet, Executive Director of the Ithaca, N.Y.-based The Smith Family Business Initiative at the university.

In the survey, first presented at the May meeting of the Congressional Family Business Caucus in Washington, D.C., some 92 North American students enrolled in family business or entrepreneurship-related courses voiced their worries.

The top concern among the Next Gen respondents was the need for “family communication,” that is, there’s a lack of family communication, they said.

The big issues of building a great workplace culture, recruiting and training employees, and improving benefits and pay are not yet top of mind. And broader issues like, reducing the federal deficit or national debt, likewise have not yet appeared on their radar.

After communication, the students said their next worries were about their ability to “grow revenue” and build upon their family business. The third major concern was wondering if there is a basic “succession plan” in place.

Family businesses, and all businesses, are a mix of generations. But with people living longer, and retiring later, the leadership pipeline can get jammed up.

The Cornell survey tells us clearly that the older leaders, mostly Boomers, are not communicating enough with the Next Generation. They’re feeling left out.

Talking to The Future

After the pandemic, the shift to remote or hybrid work has made generational differences starker. The workplace is beyond all recognition from five years ago.

Oldsters are still getting used to Zoom meetings, updating CRMs, social media marketing posts, while the Next Gen sees this as a way of life.

It’s worth understanding how generations communicate. If you’ve never thought about these differences, here are some highlights and possible ways of bridging the communications gap.

Baby Boomers

The soon to retire, or already retired, Baby Boomers, born post World War 2 and into the mid-1960s, are usually represented as having a strong work ethic, seek direct, face-to-face communication styles, and have been disciplined by hierarchical work structure with clear titles and guidelines for authority.

This group is aging out fast, though is still very much running the show and living longer than ever. Boomers tend to prioritize personal connections and formal communication, using phone calls, live meetings, and memos as the correct way to communicate, even if the newest generations avoid the phone and can’t stand in-person meetings.

Recommendations:

  1. Current Gen: Text your children about the family meeting you are holding.
  2. Next Gen: Call your parents on the phone, speak with them “live,” and set up a live meeting about succession plans

Generation X

When we look at the next generation, Generation X, born between the mid-1960s and early 1980s, they straddle the first analog to digital transition. They are adapters, the first techies in the home, and prefer efficient communication that doesn’t encroach on their passions or work-life balance. The old ways are for the dust bin.
Generation X prefers straightforward, concise communication, and as the first masters of emailing, then texting, and other new digital platforms they have maximized their time and results, while still having fun.

Recommendations:

  1. Current Gen: Set up a Happy Hour Meeting for next business update
  2. Next Gen: Call for a Next Gen Leadership meeting in the office conference room, and run it with a printed agenda.

Millennials

Born between the early 1980s and the mid-1990s, Millennials, also known as Generation Y, grew up during a technological revolution. They value work-life balance also, even more than Generation X. They seek purpose in their careers, and are super digitally adept, shaping their communication and letting the world know how to best reach them, some even being digital nomads, that is, working from anywhere in the world that has internet access. Who needs an office, desk, or HQ? Why not work from Costa Rica?

Millennials value authenticity and open communication. They prefer interactive platforms like messaging apps, email, and social media. They long for recognition for their contributions and enjoy opportunities for personal development, so long as it fits into their lifestyle.

Recommendations:

  1. Current Gen: Propose your Millennials run a Zoom meeting on latest social media technology. Praise them for helping them understand.
  2. Next Gen: Create an off-site meeting to talk about roles and responsibilities moving forward. Run it. Own it. Ask the tough questions.

Next up, Generation Z.

Born from the mid-1990s to the early 2010s, Generation Z (aka post-Millennials), are true digital natives. They are the tech-savviest, quickest learners, and expect instant communication through various digital channels. There is no reason to talk on the phone ever again.

Generation Z embraces digital communication as second nature. They prefer instant messaging on platforms, video conferencing, and collaboration tools. They appreciate authentic, real-time feedback and seek diverse and inclusive workspaces.

Recommendations:

  1. Current Gen: Ask Gen Z-ers to conduct a family business meeting on the “future of technology” and how it will “transform our business.” This will get them thinking and engaged in the business.
  2. Next Gen: In this same meeting, place on the agenda an item that says: “The future of our leadership” and what skills will be needed to “transform our business.” Have the Current Gen explain how they see the Next Gen stepping up.

Here come the “Alphas.”

Born after 2010, Alphas are the youngest generation entering the workforce in the coming years. Though not yet significantly represented, they are growing up immersed in a world of advanced technology and have their unique traits yet to be fully understood.

While Alphas are yet to join the workforce, they are expected to be even more digitally native then their elders. Their communication preferences will likely reflect the latest technological trends as they grow.

Recommendations:

God only knows

 

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Policy and Taxation Group is the Voice for Family Offices and Successful Individuals in Washington, DC focused exclusively on the critical tax and economic policies that impact them.

Since 1995, Policy and Taxation Group has been the leading advocacy group working to reduce and eliminate estate tax, gift tax, and generation skipping transfer tax while blocking increased income tax and capital gains taxes, the creation of a wealth tax, and other hostile tax policies that punish hardworking taxpayers and success.


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