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Many family businesses today are struggling to ensure the transmission of family values to the next generation.
“We live in the same house, but we barely talk to each other.” “How do we teach our children about what is right and what is wrong?” “So now I need help to talk to my son.” We hear similar complaints from many business families in the course of our academic work across India.
With the diversion of the internet, the smartphone and Netflix, plus work pressures, the time spent together by different generations is reducing rapidly. The Indian Family Survey Report 2018, sponsored by the Britannia Good Day food company, revealed that one in two millennials spent less than 10 days a year with their grandparents, and around a third of Gen Z young people living in large cities spent 10 days or less with their siblings in a year. Modern families are also often divided by separation and divorce.
The value transfers that happened unconsciously through ad-hoc conversations among people sitting around together can no longer be taken for granted. Fond memories of growing up in closely-knit joint families, eating meals together, and watching television together, are a far cry from the life of generations Z and Alpha.
Parents the world over struggle to find time to communicate with their children, but company owners often feel particularly hard-pressed because of the long hours spent prioritising the business.
While entrepreneurs in many countries face similar challenges, the problems are especially important in India where family-run businesses are particularly visible.
A family business cannot build a legacy without shared family values. It is not just a matter of feeling comfortable — a shared culture creates the basis on which a company can continue to prosper as control passes from one generation to the next.
When children join the business, there are tensions. They are family members but they often know little about family history. For example, a newly-graduated daughter of a founder of an infrastructure company in Hyderabad, India, confessed: “I know that my father has faced many challenges while building this firm. However, he never tells me how he overcame them. I know [in general] what happened. [But] I do not know why some things happened and the reason for some decisions that were taken.”
Family seniors worry about family values not getting passed to the next generation but spend little time with the next generation for the transmission to happen organically. The father of this Hyderabadi young woman, complains: “I assumed that my daughter would know. Also, she is busy with her life, and I have always been busy with work.”
So what’s the answer? First, prevention is better than cure. Family business owners must start to pass on family values early — when the heirs are still young children.
However, if that does not happen, business owners can catch up later. They should create opportunities to share values, history, and experiences. Some families hold a mandatory weekly Sunday breakfast together; others arrange family retreats; and others still insist all family members attend family events such as festivals, birthdays, and marriages.
Next, some families would be well-advised to establish formal mechanisms such as a family council to facilitate dialogue. As the children reach their teenage years, they must be introduced to the council. Family council meetings may be held perhaps once a quarter in large families or twice in a year. The meetings may be held in a neutral place so that everyone feels comfortable.
A third-generation member of a steel fabrication firm in Indore, India, spends considerable time with his grandfather, the family business founder. Initially, he was sceptical. However, a family-appointed coach insisted on these contacts, and planned and moderated the meetings. With time, the young man started to appreciate his grandfather’s wisdom, and they met often.
Families sometimes need to act urgently but they do not know how. The fear of upsetting loved ones looms large. An outsider can help.
When appointing an adviser, look for someone who is an expert, unbiased, and a listener. A counsellor who can allow solutions to emerge rather than impose them, and can diffuse a heated atmosphere.
The adviser can create opportunities for the seniors to share wisdom and for the next generation to share aspirations. They can moderate and navigate among family members.
In one case we know, a family adviser suggested that the patriarch talk about the early years of the business in the form of a story, in the third person, with pictures, and some role-playing, to make it interesting for the next generation. It worked so well that the next generation requested the next council meeting be held as early as possible.
Many families do not eat, pray, or stay together in the 21st century. Nevertheless, they can still belong together through shared values, experiences, and the vision to perpetuate the family business and its legacy.
Nupur Pavan Bang is Associate Director, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business, India, and Simran Senani is Senior Consultant, BAF Consultants, India. Views are personal
This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment