News & insights
What happens when the younger generation turn their backs on the family business?
13th January 2020
Yesterday, Prince Harry and Meghan Markle released a statement announcing that they were stepping back from their duties as senior royals to split their time between the UK and America, essentially turning their backs on the family business. Of course, Harry has never been in line to become CEO of this particular operation. However, the move will still have implications for Brand Windsor.
In a world of big corporations and high street chains, family businesses are the heart of the UK economy. Whether it is a man with a van and his son putting up wallpaper, a butcher’s shop which has been passed down through the generations or an agricultural dynasty, it is often the dream of the older generation to see their legacy passed down to their children. In fact, particularly in farming families, the entire succession plan could depend on it.
Many business families think that they can easily sort things out without advice. However, because there are both business issues and family issues to consider, it can be even more crucial to get things set in stone.
As with any business, everyone on the payroll has a part to play, but when the venture is a family affair, there will likely also be more of an emotional element. Expectations may be higher, such as demands to work long hours or make financial sacrifices, because of blood-ties. However, this is not for everyone, meaning someone else will be needed to keep the business alive, and sometimes these decisions require help.
I have experienced this a great deal with family businesses generally and particularly in the farming community when supporting those coming to the end of their careers with estate and succession planning. I would always suggest that business owners discuss their plans for the future with the next generations and ask them what role they would like to take, if any. Then, and I can’t stress this enough, get this down in writing so that everyone is clear what they are in line to inherit or what position they stand to take over when the time is right. This should, hopefully, avoid any nasty shocks or surprises.
If the business is entirely reliant on one person or family unit taking the reins, a disruption to this plan could lead to its collapse. This is why it’s essential that everyone who currently has a role in the business understands what’s expected of them in both the short and long term, as well as who will take over from them in the future. If you need to recruit someone external, when will you start looking? Will the dynamic work if all other employees are family? Have they got the skills to fulfil the role and if not, how can you help them acquire those skills?
It is also pertinent that everyone feels that they can be honest about what they want. It has been suggested that The Queen had not been consulted about Harry and Meghan’s decision, and as well as the practical implications this has, it can also be hurtful – it could be construed as rejecting the family, not just the work. When I deal with these cases in a professional capacity, I have to focus on the legal issues but I do wonder if the courteous thing for Harry to do would have been to let The Queen know his announcement before the news broke, not just as the head of the firm but also as his grandmother?
I’ve seen this time and again with family firms, where a child has decided they would like to learn a different trade as opposed to taking over the farm (for example), and the older generation has taken this as a personal slight, feeling that perhaps the agricultural business is not good enough for them. You can empathise with both sides, but that doesn’t make it any easier. It’s a far more unpleasant situation than if an external employee decides it’s time to move on, and the ripples can often be felt deeper in the relationship. This is why it’s so important to get everything agreed in writing where businesses are concerned.
I have seen families view the rejection of the business as a sacrifice of any inheritance and the ‘black sheep’ is essentially written out of the will as well as the business plan, which can lead to lengthy family disputes and legal battles. Whilst it’s unlikely that we’re ever going to see the Duke and Duchess of Sussex cast out completely, it can be a real worry for many young people considering a different career.
It’s not all doom and gloom though. I’ve seen many family businesses survive one or more members of the next generation decide it’s not for them and, with careful planning, everything can fall into place with relatively little drama.
Through interventions such as mediation, preparation and above all, honest communication, harmony can be restored and everyone can, hopefully, live happily ever after.
Elizabeth Armstrong (TEP)