Very few college students plan to start at the family firm immediately following graduation, though many say they may work there someday, according to a new report from
Just 3.5% on average of the 34,000 university students surveyed by E&Y across the world said they intend to work for their parents immediately after graduation. Instead, more than a third said they wanted to start their own businesses within five years, while the rest predominately want to work for mid-to-large-sized firms. As time passes, more warm to the idea of taking over for mom and dad. The study found 4.9% of the students are willing to ascend the throne at their family businesses five years after graduation. Moreover, nearly 20% were agreeable to the idea of succeeding their parents at some point in the future.
The number of heirs interested in eventually running the family business is shrinking, however, the result of an improving global economy. Since E&Y and its partner, the University of St. Gallen, in Switzerland, last completed the survey in 2011, the pool of potential heirs they found has shrunk by 29%. “There were more attractive options outside of the family business,” says Thomas Zellweger, a professor at St. Gallen. And the decision to chase dreams outside the confines of the family business isn’t surprising, says E&Y’s Peter Englisch. “Nobody wants to be perceived as just the son or the daughter of the owner, and had the privilege of just inheriting it, and not earning it.”
A number of factors are at work in an heir’s decision to take their parents' spot. To start, E&Y has found succession rates are lower in developed countries with more access to capital and alternative opportunities (presumably giving the second generation a greater opportunity to start a separate company). Then there’s the fact that a larger, more successful company is simply more likely to lure another generation. “Think about Rupert Murdoch’s sons—” James and Lachlan, recently installed, respectively, as CEO and executive co-chairman of 21st Century
What’s an entrepreneur to do to get the second generation involved? Expose them early but without applying too much stress, advises Zellweger--perhaps starting a child off as an intern with no obligation to join and limiting how much worry about the business gets brought home. “If you have family that always talks about the business,” he says, “I think that can be very frightening.”
Entrepreneurs, frankly, should also think more about their daughters, says Zellweger. Almost 25% fewer women intend to become successors five years after graduation than men. Globally, France had the widest gender gap (84.2%), followed by Colombia (70.2%) and Canada (67.9%), and the study found men to be more confident in their ability as entrepreneurs, while women view entrepreneurship as more risky. “Don’t exclude your daughters here, and include them early in the discussions about the business,” says Zellweger. “Try to get them motivated and give them the same opportunity you might give your sons.”
