Most CEOs of family businesses don’t have a formal retirement plan, and 70% of family businesses don’t have a formal succession plan, according to a recent report published by Babson College. But Millennial CEOs are ready to take the helm, the report found.
Longer life expectancy and changing expectations about work and leisure are stressing business families, Babson Entrepreneurship Professor Matt Allen said in a news release.
“Take for example a family where next-generation leaders are waiting, in their 60s, for the current generation to step down so that they can move into primary leadership position,” Allen said. “This is just one of the issues that this ambitious data collection effort addresses.”
Among the findings:
- Millennial family business leaders (39%) have the highest level of education
- Belonging to a more recent demographic cohort is related to lower CEO tenure
- Millennial family CEOs plan to retire before their 50th birthday
- Family firms led by CEOs from Generation X and Millennials perform better
- Global family CEOs plan to retire between the age of 61-70
- More than half of global family CEOs do not have a formal retirement plan
- More than one-third of global family CEOs after retirement don’t plan to spend time in business activities
- 70% of global family businesses do not have a formal succession plan
- Successors’ self-commitment and competence are the criteria for selecting the next CEO
- 47% of global family businesses have a succession plan in case of unexpected events
- 45% of global family business leaders state that ownership will stay in family hands
- Generation X and Millennial CEOs do not see that the next CEO should be from the family
- Female family business leaders plan to retire at a younger age than their male counterpart
- Decisions and succession take place earlier if the next senior family business leader is female
- Family businesses with female CEOs have less autocratic leadership than male CEOs
If you’re running your family’s business and don’t have a plan for retirement or succession, maybe it’s time to look to a younger generation for leadership.