Young, M., & Cater III, J. J. (2019). Millennials in family firms: Success factors, enhancing firm attractiveness, and the changing roles of successors. Southern Journal of Business and Ethics, 11, 157-180.
Summary
Family businesses have long been seen as the backbone of the economy, often characterized by strong traditions and long-standing values. However, as the workforce and leadership transition into the Millennial Generation—those born roughly between 1980 and 2000—family firms are confronted with new challenges and opportunities. Millennials bring a distinctive set of skills, values, and expectations shaped by growing up in a digital age. Young and Cater (2019) investigate how Millennials perform as successors in family firms, what success factors are critical for their development, and how family firms can adapt to attract and nurture Millennial talent.
Research Focus and Methodology
The study is qualitative in nature and uses a case study approach. The authors conducted detailed interviews with 31 individuals across 12 U.S. family firms. These interviews involved Millennial family members in developmental or leadership roles as well as other family members and employees who worked closely with them. Using an iterative grounded theory approach, the researchers analyzed the transcribed interviews to uncover key themes and patterns. Their research addresses three main questions:
- What are the success factors for Millennials as successors in family firms?
- How can family firm leaders enhance the firm’s attractiveness to Millennials?
- What roles do Millennials play as they progress in their family firm careers?
Key Findings
The study identified several factors and models that are critical for understanding Millennials in the context of family business succession. The findings are organized into three parts: the success factors for Millennials as successors, factors that enhance family firm attractiveness for Millennials, and a typology of the roles that Millennials assume as they grow within these firms.
Success Factors for Millennial Successors
Four critical success factors emerged as essential for Millennials to thrive as successors in family firms:
- Commitment to Family Firm Values:
Respondents consistently noted that alignment with core family values—such as hard work, honesty, fairness, loyalty, and a customer-centric mindset—is essential. Millennials who demonstrate a strong commitment to these values are viewed as more likely to earn trust and succeed in leadership roles. - Knowledge of Family Firm Operations:
Practical, hands-on experience in the day-to-day operations of the business is vital. Whether it’s preparing food in a restaurant, managing sales, or performing technical tasks, deep operational knowledge ensures that successors can maintain and eventually enhance the firm’s performance. - Strong Relationship with a Mentor:
Mentorship plays a central role in the succession process. Most respondents indicated that having a mentor—often a family member like a parent or grandparent—provides the guidance and support necessary for the development of leadership capabilities and a smoother transition of power. - Opportunity to Apply Technological Expertise:
Millennials are generally more technologically savvy than previous generations. Allowing them to leverage their technological skills (e.g., using social media, digital marketing, or innovative IT solutions) not only benefits the firm but also reinforces their sense of value and contribution to the family business.
Factors Enhancing the Attractiveness of Family Firms for Millennials
In addition to the success factors for Millennial successors, the study identified several elements that make family firms more appealing to this generation. Five key factors enhance attractiveness:
- Participative Leadership:
Millennials prefer environments where they have a voice in decision-making. A leadership style that is democratic and inclusive can make family firms more attractive, as it allows Millennials to contribute ideas and feel valued. - Fostering Teamwork:
A collaborative work culture is highly prized by Millennials. Encouraging teamwork and minimizing internal competition help create a supportive environment where all employees can thrive together. - Optimistic Company Culture:
An upbeat and positive atmosphere attracts Millennials who generally value optimism and forward-thinking. A culture that celebrates success and maintains a positive outlook can boost morale and employee engagement. - Flexible/Informal Workplace:
Millennials often favor flexible work arrangements and a more casual, less hierarchical workplace. Family firms that adopt informal practices and offer work-life balance tend to be more appealing. - Community Service Activities:
A strong commitment to social responsibility and community engagement is particularly important to Millennials. Family firms that actively participate in community service can enhance their reputation and appeal to the values of younger generations.
Typology of Millennials’ Roles in Family Firms
The study further proposes a typology that outlines the developmental stages or roles that Millennials typically assume as they progress in family firms. Four stages were identified:
- Novice:
At the entry level, Millennials perform basic tasks and are in learning mode. They typically have little authority and are mainly focused on understanding the basics of the business. - Apprentice:
As they gain experience, these individuals become apprentices. They start participating more actively in core operations and begin acquiring specialized knowledge about the firm’s processes. - Decision Maker:
With further growth, some Millennials transition into decision-making roles. They begin to manage operations, contribute to strategic planning, and have a say in critical business decisions, although they may not yet have full control. - Successful Successor:
In the final stage, Millennials emerge as successful successors. They have accumulated sufficient experience and are ready to take over leadership roles. At this stage, the Millennial is seen as capable of guiding the family firm into the future.
Implications and Managerial Recommendations
The findings of the study offer valuable insights for family firm leaders and HR professionals:
- Cultivating Success Factors:
Family firms must nurture the identified success factors among Millennial successors—commitment to values, operational knowledge, mentorship, and technological engagement—to prepare them for future leadership. - Enhancing Firm Attractiveness:
To attract and retain Millennial talent, family firms should adopt participative leadership styles, foster a collaborative team environment, promote an optimistic culture, provide flexible working conditions, and actively engage in community service. - Supporting Role Transition:
Recognizing that Millennials will evolve through distinct developmental stages, family firms should design tailored training and development programs that support progression from novice to successful successor. - Bridging Generational Gaps:
Family firms can benefit from facilitating intergenerational dialogue and mentoring. Older family members must adapt to new leadership styles and be open to sharing power, while younger successors should be encouraged to bring innovative ideas and digital expertise. - Balancing Tradition and Innovation:
While family firms are rooted in long-established values, they must also evolve to stay competitive in a modern, dynamic business environment. Integrating the fresh perspectives of Millennials with traditional practices can lead to sustainable growth and enhanced firm attractiveness.
Conclusion
The study by Young and Cater (2019) provides a nuanced exploration of the evolving role of Millennials in family firms. It highlights how success factors for Millennial successors—such as commitment to values, operational knowledge, strong mentoring, and technological expertise—are essential for effective leadership transitions. In addition, the research identifies critical factors that make family firms attractive to Millennials, including participative leadership, teamwork, an optimistic culture, flexibility, and community involvement.
Furthermore, the authors propose a developmental typology that categorizes Millennials into four roles: Novice, Apprentice, Decision Maker, and Successful Successor. This typology not only captures the progression of responsibilities and capabilities within family firms but also offers a framework for designing targeted training and mentorship programs.
For family firms, the key takeaway is that adapting to the needs and strengths of the Millennial generation is vital. By aligning organizational practices with Millennial values and by fostering an environment that supports continuous learning and innovation, family firms can secure a competitive edge and ensure successful succession planning. Ultimately, this research underscores the importance of balancing traditional family firm values with modern management practices to attract, develop, and retain the next generation of leaders.
10 Practical Insights for Business Owners and Managers
- Cultivate Core Family Values:
Ensure that Millennial successors internalize and commit to the family firm’s core values—such as honesty, hard work, and fairness—to build a strong leadership foundation. - Develop Operational Knowledge:
Provide hands-on training in various business operations. Practical experience is essential for successors to understand the inner workings of the firm. - Invest in Mentorship Programs:
Establish formal mentoring relationships, ideally with senior family members or trusted external advisors, to guide Millennials through their leadership journey. - Leverage Technological Expertise:
Encourage Millennials to apply their digital and technical skills to modernize business practices and drive innovation within the firm. - Adopt Participative Leadership:
Create a workplace where employees have a voice in decision-making. Democratic leadership can help retain Millennial talent by giving them a sense of ownership. - Foster Teamwork:
Build a collaborative culture that values teamwork over competition. This helps create a supportive work environment and enhances collective performance. - Promote an Optimistic Culture:
Maintain a positive and forward-looking company culture that inspires confidence and attracts Millennial successors. - Ensure Workplace Flexibility:
Adapt workplace policies to offer flexible working conditions, which are particularly appealing to Millennials seeking work-life balance. - Engage in Community Service:
Integrate community service and social responsibility into your firm’s ethos, aligning with Millennials’ desire to contribute to society. - Plan for Role Evolution:
Recognize that Millennial successors will progress through stages—from novice to successful successor. Tailor training and development programs to support this growth trajectory.
This summary and the accompanying insights offer a roadmap for family firm leaders looking to harness the potential of Millennial successors. By focusing on these practical factors and adapting to the unique needs of the Millennial generation, family firms can secure long-term success and enhance their overall attractiveness as employers.