Considering the ageing demographic of family business leadership across the globe and the massive wealth transfer that is anticipated, it is no surprise that multi-generational wealth sustainability ranks high amongst the priorities of the family office sector. Dubbed the “Great Wealth Transition”, Bloomberg suggests that there could be up to $30 trillion being handed over from one generation to the next in the near-term future.
Over and above the many succession challenges linked to retaining the next-generation within the family set-up, family offices now need to focus their attention on effectively preparing future leaders to become the new custodians of the family legacy.
In this age of digitization and exponential knowledge growth, agility, innovation and continuous evolution has become critical to the sustainability and growth of family businesses. Industries are evolving at a rapid rate and the skill-sets required to lead companies into the future have changed significantly in recent times and will continue to do so into the future.
The consequent need for ongoing learning and upskilling to adapt to the increasingly dynamic nature of business poses a challenge to the traditional thinking around education and the merits of long-term academic qualifications versus continuous on-the-job learning.
Skills Required For Future Leaders
An effective blend of hard and soft skills is required to successfully lead companies into the future. The importance of agility and an innovative mindset has already been emphasized, but specific soft skills like multi-tasking, prioritization, collaboration as well as interpersonal and general leadership skills will be crucial going forward.
Leaders of family businesses also require a good understanding of the family business history, principles and values, while also being competent in financial management and aware of legal obligations and guidelines. Having these skills in place ensures that leaders are able to make sound decisions in steering the business.
Tips For Educating The Next Generation
1. Start with articulating the vision, values and purpose of the business. This will enable the current leadership to define what education supports this intent. Additionally it will assist in identifying the skills they require and the behaviours and values they need to instill in the future leadership.
2. Focus on experiential development. This is especially important for developing the knowledge and skills of younger family members. There are many ways to provide an appropriate level of exposure and responsibility which will equip them with the hard and soft skills to become mature leaders and effective decision-makers:
- Consider internships on family boards to expose them to governance structures and planning processes.
- An internship in the operating business could be extremely beneficial to understanding the structure and operational processes of the business.
- A family mentorship program can also be an effective way of accelerating personal growth and development.
- Head out into the world and see first-hand how other families, businesses and cultures take on opportunities and manage their challenges.
- Encourage future leaders to manage an independent venture. There is no better way to build experience than learning “on-the-job”. This way the next generation can develop first-hand experience running a business.
3. Consider a more hybrid formal education. Although approximately 65 percent of jobs require postsecondary education- internships, employment and volunteer experience are becoming more important considerations for managers when assessing an applicant’s readiness for a role. Although this trend reflects the growing importance of work experience in building competence, it does not necessarily undermine the importance of academic studies. It may, however, point to the merits of a more co-operative education program where there is a strong emphasis on applying academic learning in workplaces as part of the qualification.
4. Consider executive programs tailored for family offices. Some leading universities like MIT Sloan, Institut Europeen d’Administration des Affaires and Harvard Business School have launched leadership programs designed specifically for the needs of family businesses.
Professor Lauren Cohen of Harvard says that “the increasing concentration of wealth within family businesses, the growing complexity of asset classes available to families and the drop in the cost of asset management due largely to technological innovations has convinced more wealthy families to launch family offices. That makes a tailored course for wealth management for next-gen leaders necessary.”
You Never Stop Learning
As the pace of change accelerates, certain qualifications, job descriptions, and even entire industries, are becoming redundant. To achieve sustainability, businesses need to become agile and dynamic and that requires dynamic leadership.
Preparing the leaders of the future to become champions of change requires a new mindset towards education, one which still acknowledges the merits of academic learning but reflects the growing importance of on-going experiential development and micro-learning.