How wide is the generation gap at family businesses?

A new survey by Deloitte sheds light on the contrasting views between current and next-generation members of family businesses in the US, particularly regarding succession planning and risk management.

The report, titled "The Enduring Family Business," surveyed 500 individuals from family-owned businesses, highlighting significant gaps in perceptions across generations.

Among its key findings, the survey revealed that 24 percent of current generation leaders believe their businesses could continue without disruption if a key family employee left, retired, or passed away. In contrast, only 13 percent of the next-generation family members shared this confidence.

"Family businesses face an added complexity that comes with finding common ground across generations," Wendy Diamond, Deloitte Private US family enterprise leader said in a statement.

The report highlighted differing concerns about business risks, with the current generation expressing greater worries about several key areas: 23 percent were concerned about hiring and retaining employees, 20 percent about the impact of climate change, and 24 percent about capital structure. These concerns are notably higher compared to the next generation, with only 11 percent, 12 percent, and 16 percent, respectively, sharing these views.

When it comes to their perceived participation in the direction of the business, only 15 percent of next-generation members feel they have a high level of involvement in decision-making, compared to 28 percent of current-generation members who believe their successors are highly involved.

The survey also found a gap in expectations regarding ownership retention; 8 percent of current-generation leaders expect successors to sell part or all of their interest in the business, while 18 percent of next-generation respondents foresee such a sale.

Despite these generational differences, there is a consensus on the importance of technology. Forty-six percent of both current and next-generation respondents agree that technology and digital transformation are crucial competencies for future leaders of family businesses.

"Understanding the gaps in perception between generations is critical to a family business' success in the long-term," Diamond said.

"Their governance structures can be valuable as they work to prioritize transparent communications, education for the next generation, succession planning, and innovation to keep their organizations competitive and thriving," she said.