We recognize that ‘joining the business later’ may be a realistic expectation for the next generation.
From its early days in 1897 as a house building pioneer, the Wates Group has become one of the leading privately-owned construction, development and property services companies in the UK. With four generations of family leadership behind its success, the company is preparing to pass the reins to a fifth generation of successors who will write the next chapter of the Wates family and business legacy.
The role of non-family executives
The Wates Group’s day-to-day executive management roles are held by non-family members, with five family members on the company board. As for the next generation of family members and their relationship with the business, succession discussions in the near term will likely focus on the stewardship of the company through board, family council alongside family advisors and non-executives.
Andy Wates, Director and Chairman of the Wates Family Enterprise Trust, emphasizes, “Losing the family culture would make you question the point of having a family business at all.”
Professionalizing the generational succession process
Andrew Wates, former Chairman of the Wates Group, was heavily involved in the Institute for Family Business and the Family Business Network, and introduced numerous progressive processes. He was instrumental, for example, in introducing a parallel planning approach for professionally managing the succession and transition processes.
The fourth generation has moved those processes further. By doing so, they can continue to evolve the business in a way that is appropriate for the incoming generation’s needs, interests and capabilities as well as current business norms.
What will inspire fifth generation leaders?
The family leaders of the Wates Group anticipate that several members of the fifth generation will have an interest in joining the company at some time in the future. Nevertheless, Andy acknowledges that the NextGen cousins have more options than previous generations and some may be more inspired to pursue their own entrepreneurial interests than to take on a role in the family business.
“We’re a very large business,” he says, “and when the next generation of our family faces a choice, they may be asking themselves, ‘Do I want to be part of this big machine or do I want to do something on my own?’ We’re saying, ‘Come and kick the tires first and find out’. We hope they’ll give it a try. If not today, they may decide to join the business later in their careers.”
Wates Group has recognized that ‘joining the business later’ may be a realistic expectation for the next generation of successors, with an array of timeframes for when they may want to enter and exit. It’s essential, then, for the business to be flexible, for the family to adapt its views of what succession looks like and be sensitive to this in the process.
The role of the family trust
As Andy indicates, “The family members who are coming behind us don’t have to come into the business and stay for life – as previous generations might have done. The resources of the business can enable their personal success, as long as it’s aligned with the collective purpose of the family.”
While members of the third generation considered themselves to be “owner managers”, the fourth generation adopted a new philosophy, embracing the principle of being “good owners”. As such, the purpose of the business should be a force for good, and the family business legacy of being good owners should be sustained and transferred to all succeeding generations. The Wates Family Enterprise Trust has proven to be a useful tool for supporting this sense of purpose and family members’ personal pursuits while also being an effective way to engage them and add value.
NextGen family members are encouraged to become directly involved in the activities of the Trust, and participate in deciding how, as responsible owners, the money from the family trust can be used to support sustainable communities, at-risk youth and improved housing.
Creating a shared vision
The multi-generation relationships within a family can often be diverse and complex, making it necessary to be very clear on the family purpose and the role that everyone plays. At Wates, family leaders believe it is important for the fifth generation to understand the importance of positive relationships with each other and the need to come together regularly. The starting point has already been planned gatherings of all generations discussing the potential opportunities for those who want to actively engage with the family business.
The first of many steps to come
The emphasis in the succession planning process is on coaching future generations, establishing what viable career path they are interested in and where their strengths lie. It is key to respond collectively with complete transparency about the opportunities and potential limits with an approach that is fair to everyone. All of these elements are essential to understand in order to make the generation’s entry into the business a success.
The first fifth generation family member has taken the first step and is about to enter the business directly from his graduate studies. The requirement now is to make sure his experience is positive, and he receives ongoing mentoring and support of his personal development.