Poll: Fewer young S'poreans keen to run family business

Fewer young Singaporeans are willing to take up the baton of running their family's business, according to a recent study.

Only 3.8 per cent of students who are potential successors in such firms would join the company five years after their studies.

And only 1.1 per cent would be willing to do so right after graduation, showed the poll, which was conducted by professional services firm EY and the University of St Gallen Centre for Family Business.

The low level of succession interest among next-generation family members could be because succession planning is not a top priority among family businesses here, said Ms Goh Siow Hui, a tax and private client services partner at EY in Singapore.

"Further, most family businesses in Singapore are fairly young and into their second or third generation only," she added. "The presence of the founder figure who still controls the business may influence the next generation's desire to join the family business."

The succession challenge is getting tougher for family businesses, not just in Singapore, but globally.

The study, which polled around 34,000 next-generation family business members globally, found that succession intentions have fallen by as much as 30 per cent when compared with like-for-like figures in a comparable survey from 2011.

Survey participants in Mexico have the strongest intention of joining the family business five years after their studies, at 11.5 per cent, followed by those in Belgium with 8.9 per cent and Slovenia at 8.5 per cent.

Those in the US (1.2 per cent), Israel (2.4 per cent) and Denmark (2.5 per cent) were the least likely to follow in their parents' footsteps.

"Family businesses face a challenge in convincing younger members of the family that their long-term futures lie within their businesses," said Mr Peter Englisch, global leader of the EY Family Business Centre of Excellence.

"Not only is there competition from the wider job market, with young people keen to explore their options in today's fast-moving economy, but many also feel that they need to prove themselves outside of the family firm first. In many ways, this is a healthy attitude.

"The challenge for family businesses is how to harness the next generation's ambitions to break free to benefit the family firm in the longer term."

Results from the study also showed that gender seems to play a part in the succession story, as women are less likely to want to take over the family firm than men.

Only 4.3 per cent of the women surveyed want to run the family firm five years after graduation, compared with 5.7 per cent of men.

The study identified a number of potential drivers of succession intentions, including economic growth. Succession intentions fall as a country's gross domestic product grows, but they could rise again once a certain GDP level is achieved.

Dr Philipp Sieger, assistant professor at the University of St Gallen, noted: "In less developed countries, taking over the parental firm is often the only viable career option.

"As countries become wealthier, the career alternatives become more numerous and attractive. In this way, only successors who are interested and capable should enter the family firm in countries where they have career alternatives.

He added: "In such settings, it makes even less sense to pressurise children into the family business."

A version of this article appeared in the print edition of The Straits Times on September 22, 2015, with the headline 'Poll: Fewer young S'poreans keen to run family business'. Print Edition | Subscribe