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Why Culture Building is especially important for second generation SME CEOs

Many of today’s most successful SMEs were built by the founder’s hard work and grit. Now that their children are taking over the business, one of the biggest challenges that they are facing is how to attract and engage the millennial workforce while respecting the seniors who worked alongside their fathers.

The seniors grew up in an era where command and control paved the way to success. Respect meant that you didn’t question your superior. Efficiency was achieved through familiarity and habit. Playing safe ensured long term rewards.

But this has changed. The millennials now make up at least 50% of the workforce (source PWC Analysis 2012). They are not only in your company, they are also your customers and clients. To them, respect means caring enough to speak up and share their opinions. Efficiency is achieved when they challenge what has always worked in the past. And playing safe is the surest way to be obsolete.

The values that have brought the SME to where it is now, will not bring them to the next level. The marketplace has changed. The employees’ mindset has changed. The customers’ demands have changed.
The culture that was built by the founder may not be the best thing for the company right now. But changing culture does not mean throwing out the baby with the bath water. There are bound to be many strong qualities or core values that the founder has embedded into the company. The key is to identify what these core values are so that they can be consciously reinforced while you add on some core values that can lead the company into the future.

For example, Honesty, Integrity and Hard Work are perennial Core Values, while the Core Values that can give you a competitive edge today may be Agility, Innovation, Empowerment and Customer Centricity.

Maintaining some of the perennial Core Values will give your most senior managers a sense of comfort, while you gently enroll them to see the benefit of learning a new way to manage their teams. Remember that most of these seniors got promoted because of loyalty and expertise built up over the years. This doesn’t automatically make them great managers. Be patient to teach and guide them. Once they start seeing positive results, they will embrace change. After all, if they have been loyal to the founding father for so long, they will serve the next generation too.

The thing is, company culture is a living thing that can be shaped and moulded to give you a competitive edge. If you don’t consciously design it, you will have a default culture bogged down by legacy issues. And this could be the stumbling block that hinders you from taking the company to the next level.

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