The next generation of business leaders want more than a paycheck. In fact, one of HBR Ascend’s top five factors motivating millennials in the workplace is “a deeply compelling vision of what the company or team is contributing to society.”
Given that, what should today’s business leaders do to engage tomorrow’s executives? If you’re running a family business, you may already be doing it, according to Jennifer Pendergast, Kellogg’s John L. Ward Clinical Professor of Family Enterprise and Executive Director of the John L. Ward Center for Family Enterprises. However, you need to let people know.
“For a family business to survive across generations, it needs to be relevant to the next generation of employees, customers and shareholders. For next-generation shareholders, who may also be future business leaders, a compelling vision is crucial to ensure their engagement and appreciation of the family legacy,” said Pendergast, who serves as Academic Director of Kellogg Executive Education’s Family Enterprise suite of programs. “Generational transition within a family enterprise is always complex. Next-generation members often question practices from the past and want to make changes that leave their mark on the business. With the dramatic change in sentiment around work practices, business ethics and conduct across generations recently, it is crucial that family businesses assess the changing attitudes of their shareholders as well as customers and employees.”
The good news is that family businesses are well suited to being solid corporate stewards because they’re already conscious of how the family name is perceived, Pendergast noted. “Typically, they want to be known as good employers and good corporate citizens because they tend to stay in their communities forever,” she said.
Business practices aligned with younger-generation expectations for environmental friendliness, inclusivity and similar priorities are needed more than ever right now. The economy is doing well, and talent is at a premium due to the tightness of the workforce. “You have to be relevant,” Pendergast stressed. “Oftentimes families, because they’re not out hiring people, are not the first place potential employees think of. Many of them are in niche industries rather than sexy businesses. If you manufacture cleaning supplies, can you compete against Google and Uber? The truth is that there are things family businesses should be proud of. They treat their employees well. They have strong values and contribute to their communities. But what they’re not always good about is tooting their own horn. Are they out there making the case for why they’re good corporate citizens? Are they telling the next generation what they’re doing?”
Therein lies the rub: while many companies are early in the process of adopting good business practices around environmental and workplace standards, many family businesses have been focusing on these stakeholders for a long time. But they’re not making sure people hear about it. For example, there are standards for ESG (environmental, social and governance). However, many family businesses aren’t auditing or reporting against them because they aren’t required to do so. “They don’t have to submit an annual report,” Pendergast said. “They tend to be private and don’t want to spend the money to put one together. They probably have a compelling vision for how they’re contributing, but they’re not promoting it as well as they could.”
How should family companies get started? The first step is to conduct a fact-finding mission to determine what they’re already doing and then come up with a plan to publicize it. They also need to understand how they are perceived by employees and shareholders. That will help in identifying where the gaps are. “Look at workplace practices, for example,” Pendergast said. “Are you woefully behind? Survey next-generation shareholders about what they’d like to be proud of their company for. What would they like to be able to tell their friends? Are you already doing it? Put your money where your mouth is. If sustainability and workplace practices are important to you, then what can you do to pursue those goals?”
To that end, the John L. Ward Center for Family Enterprises has developed a module on sustainability for the Family Enterprise Boards program and is working on integrating the topic into its other Executive Education programs. Again, though, once leaders familiarize themselves with the process, they may well find that the foundation of the effort is already in place. “If you take it as an opportunity to figure out how to engage the next generation, then it’s not so daunting,” Pendergast said. “It’s like one of those reverse-mentoring programs where a younger person is assigned to teach a more senior person. This is a good opportunity to leverage the expertise of the next generation you already have. Don’t be afraid of them. Don’t be frustrated by them. Engage them.”
|Jennifer Pendergast, PhD, is the inaugural John L. Ward Clinical Professor of Family Enterprise and Faculty Director of the John L. Ward Center for Family Enterprises at Kellogg School of Management, Northwestern University. In this capacity, Jennifer guides the market-leading Executive Education and MBA programs and the research agenda for the John L. Ward Center for Family Enterprises. Previously, she served as the US leader of Egon Zehnder’s Family Business Advisory.|
Family businesses are uniquely complex enterprises. This program empowers current and future directors of family-owned businesses to navigate the challenges posed by those organizations while learning to design, engage and lead boards that leverage their companies’ strategic advantages.
One of the most critical times in a family enterprise’s evolution is moving from the processes, people and structures that proved successful for a controlling owner to those that support a sibling partnership. Engage with faculty from the John L. Ward Center for Family Enterprises for leadership insights on governance architecture and effective decision making to support a vision that will guide multigenerational continuity.
March 8-24, 2021
Start: March 8 at 8:00 AM
End: March 24 at 12:30 PM
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Join peers from leading family-run organizations to learn how family governance can help sustain business continuity, family unity and commitment. Come away equipped and energized to realize your vision for the future of your family enterprise with confidence.
As an aspiring leader within family enterprise, you’ll discover how to establish your credibility and authority in the business community, among family shareholders, with the board and management team. As an established leader, you’ll explore the complexities of mentoring the next generation and of managing succession and letting-go. For all, the program can enable you to better manage the nuanced paradoxes that are characteristic of family business leadership.
May 3-14, 2021
Start: May 3 at 8:30 AM
End: May 6 at 12:00 PM
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