How Gen X Wants to Change the Way the Business is Run

How Gen X Wants to Change the Way the Business is Run

As the baby boomer generation braces itself for retirement, businesses are facing a change in direction as members of Generation X become the next set of leaders.

A survey of family businesses released by KPMG last year revealed that 60% of family business owners are looking to retire in the next 10 years.

Family Business Australia CEO Philippa Taylor says that one year on, we are starting to witness this paradigm shift as baby boomers retire and Gen X takes over.

'The biggest shift stems from the next generation holding formal qualifications before entering the business. In fact, more than three quarters of the next generation of managers has a diploma or higher. Previous generations would typically receive on the job training from their predecessors before taking over.

'What it means is that the next generation is learning best practice approaches to business management and often sees the world quite differently from their parents. Keen to try new approaches, less hierarchical and more participative management structures, they often find themselves butting heads with their parents.

'The workforce that Gen X will be leading will require a completely different management style with Generation Y less motivated by a series of raises and titles and more focused on what motivates them personally.

'We are also witnessing social changes in the way family businesses are run, which reflects the cultural differences between Gen X and the Baby Boomers.

'Gen X has a much bigger commitment to work life balance. This is particularly noticeable in family business and the approach to parenting. Gen X are much more concerned about achieving a better work life balance and take a more active role in parenting. The previous generation often played to the stereotype that the husband worked and ran the family business, while the wife looked after the family. This certainly isn't the case with Gen X.

'Gen X is much more open to change and risk-taking in their growth strategies. This is particularly noticeable in the online space. Whereas the baby boomer generation was resistant to entering the online space and in particular utilising social media –Gen X is turning to online as another source of revenue," Taylor said.

The survey also revealed that 60% of the younger generation felt their leadership style is different to their predecessor. When asked what they would change about the management of the business, 37% said the business strategy, 23% said governance structures and a further 23% said management style or structure.

'These trends are definitely coming to the fore. We are seeing the younger generation applying their business knowledge and training and introducing more management and governance procedures into the family business.

Family Business Australia assists family business transition from one generation to the next and provides advice on establishing best practice governance for the family business. The organisation's NxG CEO Program provides the opportunity for next generation family business members to come together as a group and spend the morning with a successful CEO of an Australian company.

'It's an opportunity to ask questions that might be real sticking points in your own family business, whether about remuneration and development of family members, governance structures or conflict resolution.

'While Gen X is willing to take a bit more of a risk, their focus on establishing good governance procedures and management structures is encouraging. It means the future of the family business sector is in good hands." Taylor concluded.

Image: Dana, Elke and Ron from Benedict Sand and Gravel