Next generation family business leader chart a different course

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The next generation family business leaders will focus on growth, innovation and further professionalization of governance structures. They will also have a different leadership style compared to the previous generation and they intend to take more risk than their predecessors. Maintaining and transmitting the family character of the business and keeping the family values alive remain nonetheless key drivers. These are the key findings of the Deloitte EMEA Next Generation Survey 2016.

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02/06/2016 |
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    Deloitte Luxembourg Family Business Leader, Georges Kioes

Family businesses in Europe, Middle East and Africa are on the eve of changes that the next generation leaders gradually will make. Some 56 percent will change the family company’s strategy. Georges Kioes, Deloitte Luxembourg Audit partner and Family Business leader: “This is a natural development, especially as times are changing. The next generation should not be clones of their predecessors but have the courage and vision to lead their company into a new direction, without betraying their family values. At the same time, the senior generation must embrace the idea of letting go.” The ongoing globalization of the economy is having an impact on family-owned companies. Many of them will focus on expansion in geographical markets or in products and services. Expansion requires a different way of leading a family company, according to 80% of the future leaders, who intend to be less paternalistic than their predecessors. Apart from that, the successors will change corporate and family governance structures and they are more open to hire non-family executives to guarantee the continuity of the family firm.

Innovation and risk

There is a common view that family businesses are inclined to be risk-averse and unwilling to innovate, even though they have the resources to do so. Georges Kioes continues: “Our survey suggests the contrary for the upcoming generation: many families are well aware of innovation and potential new developments. For 76 percent of the next-generation leaders innovation is one of the top 3 priorities. 18 percent deem it as priority number one. What is now important is to convince their family members of the need to keep up with the times.” While more than 60 percent of family members are aware of innovation, only 40 percent are currently willing to take on the associated risks. Nonetheless, 55 percent of the successors say that their companies already innovate at a faster pace than competition and 51 percent intend to have a more aggressive risk profile, but in a more controlled way.

Family character

One of the main challenges for successors is to maintain the family character of the business and keep the family values alive, passing it on to the next generation. Another challenge is the formalization of succession planning. Some 60 percent will succeed as leader without a formal plan. But still almost half of the interviewees started preparing for the leadership role before working life began.

About the NextGen Survey

The EMEA Next Generation Survey 2016 is an initiative of Deloitte. Between January and April 2016, 92 in-depth and face-to-face interviews were conducted in 19 countries in the EMEA region.

The complete survey results are available on the Deloitte Luxembourg website: www2.deloitte.com/lu/next-generation-family-business

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