Identifying and cultivating the future leaders of a company is central to the longevity and success of any business.
The stakes are higher still when developing the next generation of leaders in a family-owned firm. Succession planning carries tremendous responsibility and is more consequential for local communities, the family dynamic, and UK PLC.
Family businesses make up the majority of private sector businesses in the UK. They are the bedrock of local communities, creating jobs and driving growth all around the UK by employing over 14 million people, and contributing £637bn* to UK GDP which highlights the sector’s local and national economic importance.
For Cambridge-based property development and investment company, Howard Group, generational transition is less about the succession of individuals and more about passing on the baton of stewardship through the generations. There is a collective understanding that runs deeper than ‘ownership’ which respects and embraces the opportunity to be part of something bigger than just realising stakeholder benefit, embodying the company’s purpose to improve and enrich lives through responsible investing in people, places and ideas – within which positive societal impact is at its heart.
Nicholas Bewes is the CEO and third generation steward of Howard Group. As the company approaches its centenary in 2035 and looks towards the transition to the fourth generation, Nicholas takes a look back at his own experience of taking the helm and shares the key ingredients for navigating a collaborative and successful generational transition.
Nicholas Bewes, CEO, Howard Group
Despite marrying into a family that owned a business, I knew very little about family businesses and hadn’t planned on joining the firm. The head office was in Bedfordshire and my wife and I were contentedly pursuing our working and family lives 60 miles away in Surrey.
Over a period of a few years, there were various discussions with the family and advisors about me coming on board. The more I listened, learnt and explored, the more I saw that there was considerable opportunity in the business for it to evolve as a property firm and focus on core operations, rather than being spread too thinly across multiple sectors. This prospect acted as the catalyst for me to make the leap
So, in 1999, we made the move from Surrey to Cambridge, I joined Howard Group and working together with shareholders helped to navigate the company into the third-generation.
Rediscovering the entrepreneurial spirit
From the outset, members of the Board, my parents-in-law, and the company’s accountant were very supportive in guiding me through the transition from multi-national business into the family business and explaining what was expected. I was enormously grateful.
It is true that there are often high expectations placed on family members entering a family owned business, but I remember being told that the journey is more of a marathon than a sprint, and that our time horizons as a business are typically quite long, meaning that we have the opportunity to take things at a steady pace.
This provided me time to get to understand the business, as well as considering what we might be able to achieve into the future.
When I first started, the business looked very different to what it is today. We were indeed a long-established business but had been through many different iterations over the years, as is often the case with a family business steered by an entrepreneurial founder.
I became excited at the prospect of being able to rediscover some of that entrepreneurial spirit which had existed at the outset and what that might mean as the business develops into a third generation of ownership and stewardship.
Over the years, I have come to realise that we are just one part of a continuum of our family business story. We have a strong shared sense, as do many family-owned businesses, that we want to hand it onto the next generation in better shape than we took it on.
Everyone takes these responsibilities very seriously, and part of my role is to ensure that there is scope and space for us to make wise decisions.
Fourth generation succession preparation
There is no substitute for planning well and engaging with the next generation.
We have an established Family Constitution which sets out our family governance principles, as well as a Family Council which provides a forum for the family to meet across generations and consider issues such as succession and responsible ownership principles.
It’s also important that we have safe spaces, more informal forums, in which we can speak freely and honestly with one another to enable family members to share their ideas, concerns and questions. Trust lies at the heart of any family business; that knowledge and conviction that we are each working in the interests of all family members. Having the support and commitment from the family is essential. If trust fails, things start to fragment very quickly.
I have had constant unwavering support from the family over the years which has unquestionably enabled me to carry out my role.
Surrounding ourselves by trusted advisors is also critical and we are already thinking about those advisors we need to help us manage the transition between two generations of shareholders.
A blessing not a burden
It is very easy for each generation to feel the pressure over needing to sustain and perpetuate the family business. There is a startling statistic that fewer than 4% of family businesses survive through to the fourth generation, and only 1% survive beyond the fifth.
To buck this trend, we must not place too much of a burden on the next generation. What we should do is provide scope for each generation to make wise decisions that are right for them, and not feel unhealthily bound by previous generations’ ideals or expectations.
Someone once made what I felt was a helpful distinction between a ‘family business’ and ‘a family in business’ and I am increasingly seeing ourselves as a family in business – that is a family that is able to work together and evolve as each generation emerges.
The Howard Group business is very different from what it was 50 years ago, and who knows what we might be doing 50 years from now? It may be property focused but it could equally be something else altogether and that is for the next generation of owners to discover and decide.
What I do know is that we have a common desire to work together as a family. We have a shared vision to continue operating the family business and provide a positive impact on the wider community. Family values sit firmly at the heart of our legacy.
My advice to the next generation is to enjoy the opportunity and the experience, and invest in building trusted relationships with each other. There will be challenges and it can be hard to switch off and relax, but the positives do outweigh the pressures. The family business must ultimately be a blessing, not a burden.
Trust, community and faith
There are many things that I have learnt along the way as a leader of a family-owned company, but I’ll highlight three.
First of all, our reputation and credibility are so important. There is a saying about trust that it arrives on foot, but leaves on horseback. It is such a precious resource for a business, and so often undervalued. We have spent many years building trust and demonstrating our integrity through our interactions, our social impact investments, and ways of working. Our reputation is one of our most nurtured and protected assets.
Secondly, I have learnt that business is ultimately about people and relationships. As people, we spend much of our time in the workplace, and it has always seemed strange to me that some businesses are defined by mistrust, conflict and broken relationships. We have been so fortunate and grateful to have worked with many remarkable individuals in the Howard Group team who have contributed to our success, as well as countless others who have supported us and aligned with our values over the years.
Finally, Howard Group’s business values and vision reflect our firm belief that there is a greater purpose that lies far beyond that which we simply do day-to-day. In our family, we talk a lot about responsible stewardship, and very little about ‘ownership’. As a Christian, I believe that we have been entrusted with this business, and with that comes the responsibility to create a lasting legacy that, God willing, will be cherished and preserved long after the business has transitioned to the next generation.
The next generation of pioneers
Family Business Week (20 – 24 November 2023) is a national week-long celebration and recognition of family businesses as a force for good. Led by Family Business UK, this year’s theme of “Future Leaders” will shine a spotlight on the innovative family firms that are championing and shaping the next generation of business leaders.
Running for the first time, nominations for a new ‘Ones to Watch’ future leaders list are now open. You can nominate an individual under the age of 40 and help showcase and celebrate their contribution to a family firm.