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The business transfer process can often pose some major intergenerational challenges that can compromise its success.
Generally, transferors and transferees are not from the same generation and have different values and ways of doing things. Being aware of these differences and setting up communication and governance mechanisms can help bridge the intergenerational gap.
This is a key issue, studies have shown that there is a wide gap between people born before 1965 (traditionalists and baby-boomers, who are on the verge of disposing of their business) and those born after (generation X and Y).
Different values
Traditionalists and baby-boomers tend to have a Cartesian management style and consider work as a principal value. Gen Xers and Gen Yers have a more human management style and attach more importance to the work-personal life balance.
For them, work is but one of many components, it’s a source of knowledge. The value of work is not measured in how many hours they put in, as is the case of the previous generation, but as a function of their contribution to the business.
Additionally, authority doesn’t impress Gen Xers and Gen Yers as it did their parents. They’ve been used team work from a young age and prefer group management and decision-making. It’s been noted that, on average, three transferees take over from a single transferor.
The previous generations, on the other hand, tend to work in isolation, more likely to call on external professionals for advice.
The gap is so wide that, for the first time in Québec, the generational influence is stronger than the heredity influence, that is, that Gen Xers and Gen Yers are more influenced by their own generation’s values and behaviours than those of their parents.
This, understandably, leads to a certain degree of disappointment with entrepreneur parents who’d like their children to be more like they are. It can also lead to considerable misunderstanding on both sides and create tension.