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Gen Z: The new challenge for family businesses
MAHTAB UDDIN AHMED
In recent years, family businesses are facing a new wave of challenges, dealing with Gen Z. Except for a few, most family-run companies are showing cracks that could lead to collapse. The older generation hopes their progeny will follow in their footsteps, but are they truly leaving behind stellar examples?
One business owner, notorious for mistreating employees and vendors, left a daughter who kept us waiting for hours to flaunt her authority, finally summoning us just when we were about to leave with a gun casually placed on the table. Then, there is the son of a wealthy family who refused to join their family empire because of his father’s unethical practices, which reflects the growing generational divide in ethics and professional approaches within family enterprises.
Many family businesses focus only on wealth accumulation, overlooking the importance of preparing the next generation for a smooth transition. The older generation tends to be hesitant to allow newcomers to grow by making mistakes, expecting them only to mirror them. They fail to understand that strategies that work for today’s leaders may fail tomorrow.
Gen Z is tech-savvy and entrepreneurial; they value diversity and inclusivity. They prioritise mental health, work-life balance, and ethical practices. Highly adaptable, they embrace innovation and social causes, preferring authentic communication. Financial independence and personal growth are central to their ethos, with a focus on purpose-driven careers as opposed to traditional paths.
In Bangladesh, family businesses are often rooted in traditional practices, valuing hierarchy, loyalty, and relationships over process-related formalities. They emphasise control, stability, and empire-building, relying on personal connections and time-tested methods. However, their informal management styles, dubious ethical practices and resistance to change often clash with Gen Z’s focus on innovation, transparency, and inclusivity.
It is time to align with Gen Z by fostering open communication, involving them in decisions, and prioritising transparency. Encouraging innovation, adopting technology, and mentoring while respecting values like work-life balance can bridge gaps, ensuring smoother transitions. These preparations must begin years before transferring the family business baton to Gen Z.
Some successful family-run businesses that try to replicate past success models often overlook the need for fresh strategies. They hesitate to develop/part with loyal but outdated employees, leaving Gen Z confused with the work dynamics. They often forget a critical principle: “Losers live in the past, while winners learn from it and focus on building the future.”
Deloitte’s 2024 Family Enterprise Survey reveals significant generational gaps in family business succession. While 63 percent see “interest in succession” as a major risk, only 13 percent of next-gen members strongly believe in smooth transitions.
Recent global and local events highlight a significant shift in how Gen Z perceives and reacts to the world around them. Take the Gaza conflict, for instance; while many governments expressed support for Israel, the youth worldwide stood firmly on the side of justice and truth, amplifying unheard voices through social media and grassroots activism.
Closer to home in Bangladesh, the older generation often turned a blind eye to the injustices of past regimes, hesitant to challenge the status quo. But it was Gen Z that fearlessly took to the streets, demanding accountability and change.
Gen Z is an active force for change, challenging outdated systems and dreaming of a better future. They inspire hope in uncertain times, urging us to trust their vision and empower them. With guidance, they can lead society’s growth and progress, shaping a brighter tomorrow.
The author is president of the Institute of Cost and Management Accountants of Bangladesh and founder of BuildCon Consultancies Ltd