51% of decisions in family businesses are made by senior generations

Over the last few years, business owners have inquired about ways to integrate the younger generations with the purpose of preserving the family business. In a recent FOX study, 70% of survey participants said that generations 1 and 2 are leading the business. Furthermore, as indicated in the graph below, 51% of decisions are made by the senior generation compared with 38% of decisions reached through consensus. I believe this information indicates a struggle family businesses are faced with, in particular finding appropriate ways for the younger generation to have a voice in the business.

Business succession is one of the most important governance concerns of family offices

At FOX, we often hear questions from families and family office executives about the suitable business structures needed to support their intergenerational leadership transfer. From my perspective, this is not a new concern; however, with the rising next generation, I believe it is crucial for business owning families to decide on their long-term vision and goals to successfully plan the integration of younger family members. We learned from a FOX study that 32% of family offices are concerned about the succession planning strategy of the family business (see chart below). Having a formal governance plan and procedures is the second most important concerns for families. In the upcoming 2017 FOX Family Office Study, we will assess the family office landscape with a focus on the inclusion, or lack thereof, of the next generation.

2017 FOX Family Office Study

The Family Office Study is FOX comprehensive family office survey that offers a view on the current best practices, challenges and concerns of family offices. The survey launched May 19, 2017 and all family offices in the FOX community are invited to participate. I am excited to share that this year, the study will cover the following topics:

• Family business oversight and governance
• Complexity and cost of running a family office
• Staffing strategy including employee benefits
• Client engagement and experience
• Risk management

Considering the worries we hear from family-owning businesses, we decided the 2017 study will put an emphasis on the internal organizational structure and governance of family businesses. As more businesses transition their leadership to the younger generation, FOX is interested in understanding the process and structure put in place to assure successful generational transfer of leadership.

Why Participate?

Taking the time to participate in this study is an opportunity for family office executives and business owners to think through the critical components of their businesses and get a picture of their current state. I also find it to be a powerful assessment leading families to more clarity on the vision for the future state of the business.

I highly encourage business owners and family office executives to participate in the 2017 Family Office Study. As a token of appreciation for your time, participants will have access to the latest thinking on running a family office and insights on governance from FOX subject matter experts, giving readers thoughts and ideas to guide their strategy for the future. The study results will be made available only to participants in September 2017.

If you are interested in participating, please contact FOX’s research team at research@familyoffice.com.