Blended Generations: When thinking generationally breaks down

As life expectancy has expanded and the world has become more interconnected, family business leaders face an unprecedented challenge — just ask the Queen Elizabeth and Prince Charles. Before our current era, succession in a family enterprise presented a clear and discrete dividing line between generations. There was a time for the leader to pass control to his or her rising generation, and a clear set of candidates to evaluate. Increasingly, generations are not discrete and evenly spaced, but more “blended” in nature. How is this phenomenon affecting the social and economic fabric of business families across the globe?

“Significantly,” is how one family we know would answer that question. In this family (all identifying details have been disguised), the 25 members of the fifth generation had a 20-year age difference, which expanded to 35 years among their 65 sixth-generation children. In addition, the oldest G6 members were older than the youngest G5s, leading to many awkward shareholder conversations in which middle-aged G6s were forced to defer to their younger G5 aunts and uncles.While many challenges surfaced as a result of generation blending, perhaps most prominent was a perception that G5 members were delaying the management and board succession processes to preserve a place for their children, who were on the younger end of the 35-year range. Frustrated by the perceived delay tactics, the family ended up in major conflict.Their transition stalled, and their business suffered.

The family we describe is not alone. Blended generations are a new reality that most successful multigenerational business families will face eventually. And if they don’t understand how generation blurring can damage the proverbial family fabric — by confusing family members about where they belong and what they can look forward to, complicating family relationships and causing people to disengage — they are much less likely to continue as an enterprising family.

Where Does Blending Come From?

In the example above, generational blending derives largely from the natural evolution of the family.What started with a seven-year gap in the fourth generation quickly magnified as family members in subsequent generations made different decisions about when to have children. This in turn drove the range from seven years in G4 to 35 years in G6.

But natural evolution is not the only reason that these overlaps occur. Longer lifespans that enable more than one marriage create blended families where parentage and age can also be widely dispersed.Take, for example, the Murdoch family of News Corp. fame. Rupert Murdoch had four adult children from early marriages who were beneficiaries of next-generation family trusts. Several years later, in a new marriage with a younger wife, he had twins.This “half-generation” of children created a series of complex questions that needed to be addressed. Most importantly: were the twins to become part of the older generation, or would they be treated differently than his four adult children?

Similar questions arise from cultural norms. Consider the Middle East, where children from multiple concurrent marriages are more common.Those children are more likely to have wider age differences and therefore do not fit neatly into the classic definition of a generation, leading to questions similar to those faced by the Murdochs.

Less likely, but perhaps just as relevant, we also see generations blend when a senior family member dies suddenly. This happened in one family we know when one of three brothers who owned and ran a manufacturing business died unexpectedly at an early age. His 18-year-old son took over his ownership and governance role, later joining the business.While he was closer in age to his cousins, he became a de facto member of the senior generation theoretically but remained disconnected from both the senior generation and his peers over time. He was on an island, practically speaking, for the rest of his life, never developing deep relationships with his peers, which led to conflict and disarray later in life.

What Challenges Occur When Generations Break Down?

Within the blurring of generational boundaries, each family must decide how to maintain their social fabric while allocating ownership, business and family leadership roles in this new world. Instead of a predictable hierarchy and expectation, family elders now face more complex choices with a larger, combined set of family stakeholders competing for opportunity.

Further exacerbating this challenge, it is also common for the parents to not share their choices until shortly before, or after, their passing. This keeps the family guessing and the leader’s power intact as long as possible. Since the elder may not announce a final decision, cousins and their nieces and nephews often jockey for attention and benefit, a competition that can take ugly and even violent turns, especially when great wealth is involved. Blending ages across generations adds to this uncertainty.

In what ways can this added uncertainty affect wealthy families?

In these cases, those who are perceived as second-class citizens, regardless of generation, tend to defer and disengage if they feel they are not treated appropriately. The family loses potential talent, and angry feelings may poison relationships for generations to come.

How Do Families Manage Blended Generations?

When families are faced with these challenges, it is incumbent on them to recognize the complexity and adjust their policies, rules and practices to diminish the potential for conflict and provide a fair environment for all members. Since family members grow up with the reality of blended generations and make choices for their future, it is important for a family to create some clear ground rules and expectations.

Here are four ways blended generation families manage these challenges:

  1. Principle-based planning: Focus less on generations and more on principles the business family is trying to achieve together. These principles and policies anticipate the coming generation extension.They often shift from having branch representation to a situation where employment and roles are given by merit, while other decisions are made by owners according to their ownership interest. For example, eligibility to participate in family education programs or to receive dividends can be tied not to generation, but to a specific age ranges.
  2. Age cohorts: Most families refer to generations using G1, G2, G3, etc. With blended families, terminology necessarily changes because certain family members don’t fit neatly into that language. Some families with blended generations move to age cohorts instead of generations. In fact, one family assigned family members to a “generage” group of family members of similar age, rather than generations. Grouping people within similar age ranges together helps to create common experiences, strengthen relationships, build camaraderie and promote age-appropriate exposure to the business. If the age cohorts and membership are defined early and up front, all family members know that they have a place and are not confused about their status or standing.
  3. Shorter cycles: Typical families revisit their planning horizon with every new generation, often averaging every 25 years or so. Some families with blended generations have found it more effective to shorten their planning cycles to incorporate the ideas of each new cohort, rather than each new generation. Doing so not only helps these families be more agile decision-makers, but also helps to more quickly identify brewing conflicts that the family might not otherwise know about.
  4. Pruning and diversifying: In many families,“the ownership tree is pruned” when one branch buys out another, allowing each to embark on their own business. Because individual branches often tend to be closer in age range, this re-concentrates the family and enables younger individuals to chart their own path and find their own place in the enterprise.When pruning is not as attractive, other families seek to broaden their opportunities by diversifying their portfolio, creating additional ownership and leadership options. One family we know did just that, investing in a second business developed by their youngest cohort of owners Some large families go so far as to buy a business for each cohort to allow different groups to stay out of each other’s way.

We believe deeply that family-owned businesses are competitively advantaged in the 21st century. But those advantages do not come without their own challenges. One of the greatest tests that family-owned businesses now face is how to deal with families of ever-increasing complexity — from interests to geography to age dispersion. As family enterprises continue to succeed over several generations, they will undoubtedly face the challenge of growing age differences within each generation. As much as the extended family wants to be fair and offer each generation similar opportunities for leadership, the reality of age gaps must be anticipated and managed.

1.Angus, Patricia, Reality Trumps Myth, Trusts and Estates, March 2014.