How Are Generational Differences Shaping Family Businesses Today?

Generational Differences in the Workplace

Generational differences in the workplace can be a source of tension, especially for family businesses. Here's why they don't have to be.

Generational differences in the workplace are shaping new business cultures everywhere. But in family businesses, where generational ties are bound by blood and emotion, the differences still persist — and are perhaps even more difficult to overcome.

Helping to bridge the gap between 60-something business owners and their 30-something kids has become a growth area for CPA Mike Castle and his small business accounting and consulting firm, Bond, Andiola & Company in Flemington, New Jersey.

Generational Differences in the Workplace

"Many of the parents are used to doing things with paper and pencil or Excel files, and they're still personally signing all the checks," Castle says. "But their adult children working in the business are starting to get itchy. They don't want to use a chalkboard scheduling system or sign every check. They want to be able to access business systems and payroll on their phones and hit 'approve.'"

As the workforce becomes younger, the majority of businesses are affected by younger employees' preferences to work remotely, digitize traditional processes and modernize product lines. In family businesses, where the owners' children are often in line to become the next leaders, their preferences may be more urgent if parents want to keep their children interested in the business.

Castle works with one client who hoped his son would take over the family business one day, for example, but who refused to relinquish any control to that son. "Eventually, the son realized they couldn't find a way to work together, so he left and went somewhere else," Castle says. "The father will now have to sell the business or close it."

How — and Why — to Compromise on Changes

Making changes can be difficult, especially for entrepreneurs who have built their businesses from the ground up and always made the decisions. But when parents are willing to listen to their children's ideas, they not only provide the next generation the independence they crave, but they may also learn to streamline business operations and boost profits. Consider these three tips for managing generational differences in the workplace.

  1. Create a family constitution. Sit down and establish a list of shared values that are important to your family and your business, recommends Dominic Pelligana, partner at KPMG Enterprise and a sponsor of Family Business Australia. When you've established the values or "family constitution," you can return to it periodically to weigh new ideas against it.
  2. Adopt an attitude of flexibility. Changing the way things are done in your business can seem disruptive and unnecessary, but remember that the world has changed. What if you'd also been unwilling to adapt to using a remote control for your TV? While parents may not accept every idea their children want to implement (remember to size up each one based on your agreed-upon values), they should at least listen and consider. And on the flip side, children should also be willing to listen to their parents' reasons for wanting to maintain the status quo, when that's the case.
  3. Keep an eye on the future. Most owners of family businesses hope to one day pass their businesses down to children or grandchildren. If that's your goal, remember that, to do it effectively, the younger generation needs to gain experience now that will prepare them to lead later. Doing things your way at the expense of jeopardizing the future of the business probably isn't worth it.

As new generations continue to make their mark on family businesses, leaders don't have to focus on conflict. Instead, focus on possibilities: When managed effectively, generational differences can produce more profitable businesses and closer family relationships.