Business is better when generations work together (Viewpoint)
(Editor’s note: Chris Lawlor is an agribusiness specialist for Compass Agribusiness. This is the second of two parts, discussing the intergenerational problems in agriculture and how they can be mitigated. The first part appeared in the June 15 issue of The Delmarva Farmer, and can be viewed here.)
Boomer and Gen X business owners initially went into small businesses because of the independence it gave them.
However, in the last two decades the number of ‘hats’ they have to wear has doubled.
Their initial core work responsibilities, of creating their product or service plus a little bookkeeping, now include compliance, health and safety, human resources, legal issues and the ever- growing social media marketing presence.
Until recently, capital intense businesses like farming saw the value of their assets doubling at least every ten years with growing economies, high inflation and high-interest rates.
Many farmers made minimal cash profits or losses and could still expand their asset base borrowing against their capital growth.
In many cases, the Baby Boomers acquired wealth through effort. To them, the wealth felt deserved.
Subsequent generations were therefore effectively seen as benefiting from a windfall without effort.
The Boomer is nicknamed the “founder,” while those who follow are the ‘entitled’ generation.
Many founders and owners of family businesses are entrepreneurs: driven, creative, and committed.
Their success has come due to their ability to keep things in their control and see it not as luck but reward for their efforts. They are used to getting their way and feel entitled to respect. They are proud of the wealth they have created and want only the best for their families.
Unfortunately, subsequent generations can interpret this as self-centred or narcissistic. They are susceptible to higher levels of anxiety, and are easily offended by what they see as aggression. The driven founder cannot understand their sensitivity; he is hard-wired to think of his autonomy as a healthy, competitive attitude that has been very successful for him and his peers.
For the Founders, conflict was seen as a natural part of competitiveness, and they learned to deal with it and negotiate or move on. From the 1980s, where there was conflict the opinionated or aggressor was labelled a bully.
Conflict was discouraged, so adversity and risk were minimized.
Younger generations may subsequently respond to their feelings being ignored in several ways.
They may, for instance, take on similar qualities in their own lives, expressing arrogance, entitlement, and insensitivity to others. Alternatively, they can feel chronically impaired, unprepared for their lives, and conflicted about their wealth.
What does this mean?
These observations sound extreme, and there are many variables, but the underlying fact is for successful transition the “Founders” need to work very hard on developing empathy for a more entitled, more risk-averse generation, less motivated to own a business; open to being coached or mentored but not welcoming being directly told how it was done in the past.
Business will be more collaborative for them, and terms like “eco-anxiety” are real conditions, ethical principles that once were bound by handshakes and mutual respect are now cloaked in questions like ‘how are the environment and people affected by our decisions?’
These factors will be far more important to Millennials than they ever were for profit and growth- driven founders.
Today’s post-COVID, zero inflation economy sees agricultural products at record levels with supply/demand factors heavily weighted in their favor. Arguably the only risk now centers on the environment and climate itself. What has changed is the “Baby Boomer” attitudes to risk. The natural progress of aging means that by the time they turn 70, risk appetite dwindles, and business owners that were comfortable with 30-40 percent equity when in their prime now become anxious when under 60 percent equity.
Combining this with the younger generation’s aversion to risk means it can be difficult for low-yielding, highly capitalized farm businesses to leverage themselves to fund owners’ retirement and leave the business with a comfortable level of equity for the next generation.
It may be viewed as a paradox that so much of the baby boomer’s success was related to appreciating land values instead of profits.
Now, they expect the next generation to generate yields instead of coaching them to take some risk and grow the business as they did.
Age and wisdom go together.
The lessons learned and the adversity encountered in years of business cannot be replicated.
A good mentor can teach and inspire resilience.
For the mentor, three resilience strategies can be passed on:
• Expect the unexpected. Inevitably in life and business things go wrong. Experience means people don’t panic, the first reaction is to be rational and forward thinking.
• Choose where your attention goes, recognizing things that can be changed and accepting those that cannot be. By doing this, you do not diminish the negative but also see the opportunity.
• Practice and master empathy. Always take a moment to put yourself in the other generation’s shoes and understand why they think the way they do.
A family business transition can be a process that never stops. Little Johnny or Jacqui at 17 can be inspired to study agribusiness. They can have their prospective careers openly discussed, nurturing interest and stimulating futuristic thought.
Baby Boomers have knowledge and experience.
Leveraging the next generation’s diversity of thought, IT skills, and higher emotional intelligence will get the best of both generations.
Through empathetic principles and understanding perspective, slow progress can be made when transitioning family into business.
The danger occurs when generations do not take the time to understand each other’s perspectives.
Transition will be delayed, and the next generation will be nearing retirement age unable to transition or stimulate their offspring to be involved in the business.
Business is like a party. Not much fun on your own.