Succession questions raised as family firms face hurdles
Inheritors of successful businesses built a generation ago try to cope with economic changes
Generation gap
Research by consultancy McKinsey& Company on family businesses shows the difficulties in sustaining family enterprises across multiple generations.
Globally, family enterprises have an average life span of 24 years with only about 30 percent successfully transitioning to the second generation, the research showed.
Less than 13 percent of the businesses reach the hands of the third generations, and only 5 percent of family businesses continue to create shareholder value beyond this generation.
Zhang Lili, 29, has offered consultations for a cohort of second-generation factory owners since July last year. She said the most significant challenge they face is the fixed mindset of the older generation in the face of the changing economic situation.
Many of the second generation, aged from 18 to 32 years, have a good education, broader vision, a more comprehensive understanding of human nature, and higher emotional intelligence in dealing with people.
However, they have little experience in cultivating a mature work system. "They have infinite responsibilities and expectations, but, pitifully, little practical experience," Zhang said.
The biggest obstacle in implementing their ideas is often the lack of understanding from the older generation, and being obstructed by "veterans" in the family business, she said. "Any attempt to implement something new is likely to move someone else's 'cheese'," said Zhang.
