Making sense of Generation Z

In a professional setting, members of the postmillennial generation, also known as Gen Z (born in 1996 and later), are identified as tech-savvy people who are averse to stress, value their individuality, and expect to be consulted on work-related matters.

According to an Asian Institute of Management professor, such traits, in a family business, pose a challenge to older generations looking to pass the torch, so to speak, to their kids—if they don’t try to understand why Gen Z-ers are the way they are.

“They are all about creating their sense of selves,” says Maria Elena Herrera, chair of the Strategic Management Department of AIM. “They’re very clear on who they are, who they want to be, and how they want people to see them.”

Because of this, many entrepreneurs face a problem when it comes to succession. “What happens now is Gen Z looks at the family business, and they don’t see themselves. They see it as something molded after their parents, their grandparents, so they reject it,” Herrera says.

These are new issues, adds Herrera, which have popped up in her conversations with entrepreneurs trying to bring their children—mostly in their teens to very early 20s—into their enterprise.

“We’re only starting to talk about this now because Gen Z-ers are still mostly in their teens; the oldest ones are in their very early 20s,” she says.

To understand Gen Z, Herrera says one must look at the world they grew up in.

Compared to Gen Y (1977-1995)—a generation which Herrera divides into two groups, the X-ennials, or the transition generation, and the millennials—Gen Z grew up in a world rocked by recession and disaster.

“Gen X was raised to think that they could change the world—and they literally changed the world. If you look at Steve Jobs and Bill Gates, they were Gen X. Gen Y lived in a hopeful world where everything seemed possible, thanks to Gen X,” says Herrera. “Gen Z, however, grew up seeing disaster, conflict, and recession. War came back.”

Given this kind of environment, Herrera says Gen Z-ers in the workforce look for more stability and security, compared to Gen Y, which looks for more adventure and travel—the YOLO generation.

“So if you place them in a stable but challenging position, [Gen Z] will be happy,” Herrera says.

One would think that running a family business would automatically equate to security and stability for Gen Z, but Herrera points out that this generation’s high regard for their individuality still trumps that. Again, she goes back to how Gen Z-ers consider themselves their own personal brands.

“Gen Z is looking for the right job which will fit his/her individuality,” she says.

There’s also the fact that setting up a business is easier now, thanks to the technology available—giving Gen Z-ers more entrepreneurial options other than the family business.

“At no time in the history of the world has it been so easy to create a company from virtually nothing,” says Herrera. “You can sell things without manufacturing them, you can buy a logo, you can outsource almost everything. All you have to know is how to build a brand, how to reach your customers, and how to consistently give those customers what they want.”

Given these circumstances, Herrera says entrepreneurs who are looking to pass on their business to their Gen Z children need to do one important thing: Give them their own voice.

“If the [company’s] vision is only that of the parents’, and all they tell Gen Z is, what will the company do without you? They’ll simply answer, ‘hire someone.’” So make sure you include their views. Bring them to work,” says Herrera.

She also recommends that family businesses learn the principles of corporate governance, should the next generations opt out of company management.

“Gen Z sees setting up a business as a passport to a better life, but they don’t necessarily feel the need to carry the burden of [the existing family business] as theirs,” Herrera says.