How to engage the next generation through a clearly defined purpose
Globalisation, digital transformation and climate change have transformed the way we live, work and conduct business today. Inheriting this radically transformed world are the millennials, a new generation with distinct priorities from their baby-boomer predecessors. Their north star? Purpose.

By Francois Botha
Published on Simple October 4, 2020

Globalisation, digital transformation, and climate change have transformed the way we live, work, and conduct business today. Inheriting this radically transformed world is a new generation with distinct priorities from their baby-boomer predecessors. In the private wealth space, the transition has been dubbed ‘the greatest wealth transfer in history’, with some of the world’s wealthiest families placing the fate of family businesses and family offices in the hands of the next generation. Wealth management is set to have a new face: millennials.

This represents a significant transition for family offices both in terms of talent retention and succession. Succession is a pivotal moment in a family office’s history and can represent both a huge challenge and opportunity. Family business leaders of the baby-boomer generation are seeking ways to not only sustain their legacies but also ensure that the next generation is poised to take the reins successfully. In many ways, the questions around legacy and intergenerational succession reflect the challenges of talent-retention that many businesses face today.

Businesses often state that the single biggest constraint on organisation success is the ability to get and hang on to the right people. In ‘Leading Organizations: Ten Timeless Truths’, McKinsey senior partners Scott Keller and Mary Meaney highlight the significant benefits of attracting and retaining the right talent, their research revealing that top talent can be as much as 800% more productive than average employees.

Globalisation, digital transformation, and climate change have transformed the way we live, work, and conduct business today. Inheriting this radically transformed world is a new generation with distinct priorities from their baby-boomer predecessors. In the private wealth space, the transition has been dubbed ‘the greatest wealth transfer in history’, with some of the world’s wealthiest families placing the fate of family businesses and family offices in the hands of the next generation. Wealth management is set to have a new face: millennials.

This represents a significant transition for family offices both in terms of talent retention and succession. Succession is a pivotal moment in a family office’s history and can represent both a huge challenge and opportunity. Family business leaders of the baby-boomer generation are seeking ways to not only sustain their legacies but also ensure that the next generation is poised to take the reins successfully. In many ways, the questions around legacy and intergenerational succession reflect the challenges of talent-retention that many businesses face today.

Businesses often state that the single biggest constraint on organisation success is the ability to get and hang on to the right people. In ‘Leading Organizations: Ten Timeless Truths’, McKinsey senior partners Scott Keller and Mary Meaney highlight the significant benefits of attracting and retaining the right talent, their research revealing that top talent can be as much as 800% more productive than average employees.

“Talent matters, because of its high value and scarcity—and the difficulty of replacing it—create huge opportunities when companies get things right”
Scott Keller and Mary Meaney, ‘Leading Organizations: Ten Timeless Truths’

Given the current baby-boomer exodus that many companies face, the challenge goes far beyond the obvious concerns around skill levels and the resultant impact on productivity and performance. Though “OK boomer” has become a viral catchphrase intended to mock the antiquated attitudes of the baby-boomer generation, there’s a real risk of losing invaluable knowledge and experience in this transition. How can family business leaders engage with this next generation and safeguard the future success of their organisation?

A good place to start is in paying attention to how loyalties of the millennial generation are driven by a very different set of principles. Creating a new employee value proposition (EVP) to attract and retain the best talent amongst this next-generation workforce should be high on the agenda of all businesses, especially family businesses and offices who are invested in intergenerational succession. How can we avoid throwing the baby out with the bathwater? And how can family enterprises make their offer magnetic – and deliver?

The Millenial Mindset

The difference between generations can feel as distinct as apples and pears. Sure, they’re both fruits. But what else do they have in common? As globalisation, digital transformation, and climate change have transformed the world we live in, the next generation is tasked with inhabiting a world that is rife with as many challenges as it is opportunities.

Generational challenges cannot be compared on a tit-for-tat basis. But it is still worth recognising that we live in a time of compound crises. In a fragmented social and political environment and with Industry 4.0 driving profound changes, many millennials exhibit a marked desire for reassurance. They maintain a healthy skepticism for social and political institutions, along with a steadfast belief in the need for social equality and environmental sustainability.

The Deloitte 2020 Millennial and Gen Z Survey highlights that employee loyalty has begun to rise as businesses are beginning to address their needs and interests, from diversity and inclusion to sustainability. Though the COVID-19 pandemic has placed immense pressure on all aspects of society, the next generation has emerged with an even stronger sense of responsibility towards topics such as social equality and climate change. More importantly, they are demanding that governments and businesses reflect this same commitment. This sentiment is consistent with the findings of both experts at the World Economic Forum and PwC’s recent Workforce of the Future survey, highlighting the importance of making ‘no regrets’ purpose-driven decisions that work with most scenarios, alongside some bigger bets.

“We should remember that intellectual complacency is not our friend and that learning – not just new things but new ways of thinking – is a life-long endeavour”
Blair Sheppard, Global Leader, Strategy and Leadership Development, PwC

The Importance of Purpose

The evidence supporting the benefits of purpose is compelling. Purpose consultant Aaron Hurst, the founder of Imperative, found that 42% of companies that were not considered “purpose-driven” experienced a decline in year-on-year revenue. In contrast, 85% of purpose-led companies enjoyed positive growth. The reason for this is that purpose-driven businesses attract and keep the best talent and create an environment where people feel more connected, motivated, and engaged. The World Economic Forum highlights a focus on employee experience is fundamental for corporations looking to thrive in a beyond-shareholder world.

“Purpose is the single most powerful edit point that aligns the organization. By clearly articulating and embedding the organizational purpose and the principles that uphold it, employees will be empowered with guardrails to make decisions at any level”

Judy Oh, Agenda Contributor, World Economic Forum

Purpose is the rallying cry that drives employees to connect to organisation and to each other. When leveraged successfully, purpose can move from being a static statement and be a powerful unifier and foundation for employees to live and breathe their shared values.

Defining Your Purpose Statement

As Simon Sinek states in his book, Start with Why, ‘people don’t buy what you do, they buy why you do it’. Ask yourself – beyond profit, why do we exist?

  • Why does our organization’s existence matter?
  • What is our most important reason for being here?
  • What would be lost if this organization ceased to exist?
  • Why are we relevant to the people we serve?
  • Why would anyone dedicate their precious time, energy, and passion for our company?

In order to move beyond philosophical ruminations, renowned design consultancy IDEO created the ‘Purpose Wheel’ to allow business to map how the trifecta of customer and global needs, company strengths and employee passions overlap. Anyone can hang a series of aspirational statements on the wall. Making decisions which are consistently aligned to those values is a different story. The Purpose Wheel is aimed at encouraging generative conversations about future goals and creating a foundation through which leadership can align on the ‘why’.

“Just like building a house starts with the scaffolding, the Purpose Wheel helps you engineer the intent behind the purpose statement before you start crafting the words”
Kristin Kelly & Nate Carter, Senior Design Leads, IDEO

In order to move beyond this vision scaffolding, they recommend a series of follow-on initiatives to ensure that the why is embedded in your operations and internal processes: going ‘full circle’ by imagining how many ways your organisation can create impact, answering the ‘how questions’ and assigning tangible activities to each vision, and pressure-testing it in real-life scenarios. Every action we take has an impact – positive and negative, intended or unintended. Though we can’t change this, through defining purpose we can come closer to understanding what we really want to achieve.

Purpose in Practice

Talk is cheap. Actions are priceless. In order to truly become a purpose-driven organisation, family offices must set up the governance structures and mechanisms that allow family members and employees to make day-to-day decisions that are in line with this broader vision. The top of the organisation needs to set the tone and signal a credible pledge to purpose. As the saying goes, the devil is in the details.

“When companies are genuinely committed to purpose and sustainability it is reflected in their governance structure. Responsible businesses have a governance structure that monitors and advises on environmental, social as well as financial issues.
Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship, London Business School

You fail to send out a consistent and credible message when, for example, social responsibility is part of your company’s media rhetoric yet only financial performance is incentivized.

The rise of purpose-driven investments – and correspondingly measurements – is a promising sign of things to come. As measurement practices become more sophisticated and capacity is built within this space, it will become easier for family offices and businesses to define their purpose and live and breathe this in their day-to-day operations. Millennials maintain a healthy skepticism for social and political institutions, so we can expect that they will hold organisations to account for their commitment to purpose. By embedding your vision in your operations and safeguarding it through governance, family enterprise leaders can win the hearts and minds of the next generation.

With purpose as their north star, the next generation is set to change the face of wealth management as we know it. It is clear that, if a family office or any company wants to be successful in attracting and retaining the best next-generation talent, it must become authentically purpose-driven and consistently reflect that purpose both internally and externally.

About the Authors

Francois Botha

Simple Founder. Strategy Advisor

Francois believes that the next generation of family leaders need new, simple tools and trusted experts with a fresh outlook.

Connect with Francois Botha View Francois Botha Profile

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