The Case for The Next Generation Gaining Experience Outside the Family Firm

As family-owned businesses transition through generations, the question of whether the next generation should gain experience outside the family firm before joining becomes increasingly pertinent. This practice, often debated in the context of succession planning and leadership development, carries implications for both the individual and the organisation.

Gaining external experience can be a strategic move for many reasons, shaping the future of family enterprises worldwide.

Broadening Perspectives And Skillsets

One of the primary arguments for encouraging the next generation to work outside the family business is the opportunity to acquire a broader range of skills and experiences. External work environments expose future leaders to different management styles, corporate cultures, and industry practices. This exposure can enhance their problem-solving abilities, leadership skills, and adaptability, which are invaluable when they eventually take on roles within the family firm.

For instance, a young family member who has worked in a multinational corporation might bring fresh perspectives on global market trends, innovative business practices, or advanced technology. This external experience can enrich the family firm’s approach to strategy, operations, and competitive positioning, and enable the next generation to learn skills that they would have not had exposure to had they not ventured to work and gain experience outside of the family business.

Reducing Entitlement And Building Credibility

Gaining experience outside the family business can also help mitigate issues of entitlement and build credibility. When the next generation enters the family firm after working elsewhere, they often demonstrate that their involvement is based on merit rather than merely family ties. This external experience can help them earn respect from both employees and stakeholders, who may otherwise perceive their role as unearned.

Moreover, external work experience can reduce the risk of the next generation feeling entitled to leadership positions without having proven their capabilities. It reinforces the idea that leadership and success within the family firm must be earned through hard work and demonstrated competence.

Facilitating Smooth Succession And Innovation

Integrating new ideas and approaches is crucial for the ongoing success of family businesses. The next generation's external experience can facilitate smoother succession by introducing innovative practices and modern management techniques that can rejuvenate the family firm. This infusion of fresh perspectives can be vital for adapting to changing market conditions, technological advancements, and evolving consumer preferences.

Challenges And Considerations

While there are significant benefits to working outside the family business, there are also challenges and considerations. The process of adapting to different work environments can sometimes lead to cultural and value clashes when returning to the family firm. Additionally, the family business might face difficulties in integrating external experiences and new ideas with long-established traditions and practices.

Family businesses must carefully navigate the balance between maintaining their core values and embracing the innovative approaches brought by the next generation. Ensuring that external experiences align with the firm's long-term vision and goals is crucial for achieving a harmonious integration.

Global Perspectives

The practice of gaining external experience before joining a family business varies globally. In cultures with strong familial and hierarchical structures, such as in many Asian countries, the emphasis may be more on maintaining family traditions and values. In contrast, Western countries, with their emphasis on individual merit and professional development, often place a higher value on external experience as a prerequisite for leadership roles within family businesses.

The importance of the next generation gaining experience outside the family business is a topic of considerable debate. While external experience offers valuable skills, perspectives, and credibility, it also presents challenges that must be managed carefully. For many family firms, the benefits of broadening the next generation's horizons and enhancing their leadership capabilities outweigh the potential difficulties.

Ultimately, the decision to pursue external experience should align with the family firm’s values, strategic goals, and succession planning needs. By thoughtfully integrating external experiences, family businesses can better position themselves for long-term success and innovation, ensuring that the next generation is well-equipped to lead with both tradition and modernity in mind.