Succession in the age of Generation Z

Generational differences are particularly evident when it comes to company succession. What makes Generation Z tick?

Annabelle Chapman, guest contributor
Neon sign with generation z

After millennials, a new cohort of entrepreneurs is coming of age: Generation Z.

Born between 1997 and 2012, and raised with smartphones and social media, Gen Zers are increasingly starting, running and inheriting companies. This has implications for intergenerational transfer, which is already one of the biggest challenges faced by family enterprises. Friction between generations, in the form of divergent visions for the company and different understandings of work-life balance, can block the transfer. In some cases, it can even result in the young person leaving the family enterprise - as Verena Bahlsen, the heiress of German biscuit empire Bahlsen Group, did recently. 

With more family businesses preparing a full or partial handover to Gen Zers - from LVMH CEO Bernard Arnault, whose youngest child is in his mid-20s, to countless others - navigating these intergenerational differences is key.

Bahlsen made headlines in late 2022 when she announced that she was leaving Bahlsen Group, the year after she fully joined the company as chief mission officer. Announcing her departure in a post on LinkedIn, the 29-year-old wrote:

I have stood in a German wheat field with our CEO, having a panic attack. I have cried in many a meeting. I have been unkind at times, or impatient, or interrupted people when I should have been listening, or been cold and hard when I should have stayed soft.

GenZ: Between corporate and personal branding

What makes Bahlsen’s story interesting is how it links to wider themes of succession, generational change, and the rise of social media. Born in 1993, Bahlsen is just outside the Generation Z age range, but as researchers note, the generational cutoff points are not exact. In the media, members of Generation Z are often portrayed as “soft,” which has even earned them the name “snowflakes”. However, this is only part of the story. 

As research by Roberta Katz of Stanford University has shown, a typical member of Generation Z is “a self-driver who deeply cares about others, strives for a diverse community, is highly collaborative and social, values flexibility, relevance, authenticity and non-hierarchical leadership.” 

This may affect how they view the family company and the prospect of running it one day. “It can be really hard to convince members of Generation Z that the family business relates to their values, their beliefs, and their attitude to work-life balance,” says Anita Zehrer, Professor in Family Business and Head of the MCI Family Business Center in Innsbruck, Austria, who also works as a business coach. “I coach many tourism family businesses. At these companies, the older generation tends to work 24/7, 365 days a year, while the young generation does not want to have that any more.”

Similarly, members of Generation Z who value non-hierarchical leadership are less likely to simply accept decisions imposed from above by older family members. Instead, they may prefer horizontal management, which seeks to eliminate or reduce hierarchy, and collaborative forms of work. The value they place on “authenticity” - that is, being true to one’s own personality or spirit - can shape their career decisions, but also how they choose to communicate them with the outside world. Bahlsen’s LinkedIn post, in which she mentions her “struggle for authenticity in this role,” is an example of this direct, ostensibly frank way of communicating with the public. 

Yet as anyone on social media knows, “authenticity” is difficult to get right, especially in a business context. One person’s “vulnerability” - for example, sharing their personal struggles on their professional profile - can look like “oversharing” to others. This applies to entrepreneurs of all ages and is particularly tricky for family enterprises, where the distinction between brand and personal identity is blurred (as Bahlsen wrote in her LinkedIn post: “My sense of identity is so intricately woven into Bahlsen, into my heritage and into these brands”). This comes with its own challenges: it can put the family and its members in the spotlight as they navigate the intergenerational handover, increasing external pressure during a critical period of transition. For members of Generation Z, it can also create a tension between the need to represent the company brand and their desire to be “authentic”; for example, by sharing their struggles on social media.

Succession: Trust and communication are key

However, while there are differences between Generation Z and previous ones, focusing exclusively on them can mask shared experiences. In a recent article in the New Yorker entitled “The Year in Quiet Quitting,” Cal Newport argues that, like other generations before it, Generation Z is discovering that it is difficult to balance work with a well-lived life. 

The recent phenomenon known as “quiet quitting,” in which employees put no more effort into their jobs than absolutely necessary, is actually “the first step of a younger generation taking their turn in developing a more nuanced understanding of the role of work in their lives,” he writes. “Before we heap disdain on their travails, we should remember that we were all once in this same position.” In this light, Bahlsen’s announcement can be seen as an attempt to find a balance that works for her, rather than an example of the flaky “snowflake” behaviour ascribed to Gen Z. 

Instead of pointing fingers at the younger generation, family enterprises should focus on what they can control. “Trust and communication are key,” Zehrer emphasises, adding that this communication should be ongoing during the handover. 

You need to think about the different communication steps: first with yourself, as a couple, with the family, and with the employees, and finally with the whole business.

It is not just a matter of what is said, but how it is said. “There are generational differences that result in different communication styles, which can be a field for conflict and misunderstanding,” says Zehrer. “I came across one family business where the young generation communicated with each other via WhatsApp, but not with the father, who was still in charge. He preferred in-person meetings.” These different communication styles can go beyond the choice of platform: older family members will surely appreciate it if the younger generation shares any struggles or reservations about the succession in private, rather than broadcasting them on TikTok. That way, they can be offered further training or time to adjust. Meanwhile, the Gen Zer will appreciate being spoken to as an equal - as an adult with his or her own vision for the company and need for work-life balance - regardless of the age gap. 

Zehrer also recommends seeking external support during the handover. “It is helpful to have an external person managing the whole thing. This can be a tax consultant, a lawyer or a business coach specialising in soft topics, because it is not only about handing over ownership, but also about personal, emotional and psychological topics, which are rarely dealt with,” she said. “In my experience, the younger generation is much more willing to have someone external come in and help them than the older one.”

In the end, it comes down to shared goals for the business, better communication, and empathy, which can help bridge generational differences at family-owned companies. It is not about either generation proving the other wrong, but about ensuring that the business and its values endure.

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