The Gen Z Effect : The Generational Change Transforming Leadership in Family Businesses

Sammanfattning

Generation Z (1997-2012) will make up a large part of the working population in the coming years and is therefore getting more attention from managers and researchers. There has been a lot of research on leadership styles in companies and family businesses, and there are separate studies on dealing with Gen Z. However, there are only a few studies that link these two topics, especially in a European context. Many articles describe Gen Z as lazy and unwilling to work, but is that really true? Our study aims to understand the expectations and values of Gen Z in the context of working in family businesses in order to gain a better impression of how this new generation can be managed. Our study therefore closes this research gap by examining Gen Z employees and leaders in small and medium-sized family businesses in Germany and Finland. The study follows a qualitative research design as this is particularly suitable for capturing individual perspectives on this topic and because quantitative studies on leadership styles predominate. For data collection, we conducted fourteen online and two face-to-face semi-structured interviews with Gen Z employees and leaders who are family and non- family members working in German or Finnish small and medium-sized family businesses. By interviewing employees and leaders from Generations Z, Y and X, we were able to include different perspectives on this topic. A thematic analysis of the data identified six themes relating to expectations, leadership styles, external influences and opportunities for Gen Z working in family businesses. Our findings suggest that autocratic and transactional leadership styles are outdated, and that a combination of authentic and transformational leadership styles is appropriate when dealing with Gen Z. Demands and expectations have increased compared to the previous generations. Small and medium-sized family businesses in particular need to adapt in order to remain competitive in the labor market against larger companies, which can generally offer higher salaries, better development opportunities, and more positions. Leaders must focus on creating opportunities for personal and professional development, and a comfortable and inclusive working environment. Authenticity, empathy and being a good role model are important too. They need to offer flexibility, promote informal and transparent communication, provide immediate positive and negative feedback, build close relationships with their employees, appreciate their work, and involve young employees in decision-making. Especially family members who are willing to take over the company in the future should be included at an early stage to ensure a smooth transition. Gen Z should also be involved in digitalization and innovation as they often have a better understanding of technology and are more open to change than older leaders. The traditional core values of every family business should be maintained while adapting to the rapidly changing environment. This study contributes to closing the gap in the literature on leadership styles for Gen Z in small and medium-sized family businesses in the European context, particularly in Germany and Finland. Managerial implications offer family business leaders a better understanding and guidance on how to deal with Gen Z employees. It also became clear that Gen Z’s entry into the workforce will have societal implications such as on overall leadership culture and societal attitudes towards work and intergenerational collaboration. The importance of mental health and work-life balance will also change.