The great transfer of wealth is underway, and while much has been said about Gen X and Millennials, a new report reveals that Gen Z is small (in proportion to their cohorts) but mighty. According to EY STUDY, How can understanding Gen Z's influence today power your tomorrow?while Gen Z only makes up 14% of the US population, they punch above their weight influence.
Unlike any generation before them, Gen Z grew up amid uncertainty and polarizing events. They've lived through 9/11, the COVID-19 pandemic, recessions, corporate scandals, and ongoing school shootings, to name a few. These events, as well as growing up in the age of smartphones, social media, and on-demand information, have shaped their values, desires, and beliefs.
Young but influential
As more Boomers retire, Gen Z'ers are on pace to soon surpass Boomers in the workforce. The biggest differentiator for Gen Z is their expectations of both the companies they work for and those they buy from. They are ready to use their voice and demand transparency, fairness and authenticity. Compared to older generations, Gen Z has its own take on corporate culture and work-life balance—they also prioritize enjoying their work over making money. Despite this preference, Gen Z is also the generation most concerned about their financial security, with the report revealing that 52% are concerned about not having enough money. While concerned about their financial situation, the study finds that compared to millennials of a similar age, Gen Z are less likely to believe they will become rich in the future.
Unlike their predecessors, who looked down on having a side job, Gen Z has perfected the “side hustle.” Just watch the show Shark Tank to see tons of success stories of passion projects turned into multi-million dollar companies. The gig economy goes hand in hand with the hybrid work models that have emerged due to the pandemic. The study finds that “Gen Z is gravitating toward companies and opportunities that deserve value based on their productivity and impact, not hours worked.”
Gen Z is also reshaping investment strategies. The younger generation has a greater appetite for risk and is starting to invest at a younger age. They are also interested in a more diversified portfolio, expanding beyond traditional stocks and bonds to include alternative asset classes such as private equity, real estate and cryptocurrencies. Gen Z also ranks sustainable investment as a high priority.
Can they handle the driver's seat?
According to the study, these differences in attitude are creating new obstacles for the continuity of generations within family businesses. To begin with, current leaders may need to convince new family members that the family business fits their values, beliefs and views on work-life balance. Gen Z may be less inclined to enter the family business, as they perceive it as demanding and time-consuming. They are also more interested in a career that aligns with their passions and desire to make a meaningful impact on society while remaining authentic to who they are.
Rather than simply imposing their decisions on the younger generation, family business leaders may want to create a more collaborative environment instead of a standard leadership hierarchy. Open communication and striking a balance between the successful practices of the past and the vision of the next generation of leaders are also crucial. Current leaders can also embrace Gen Z's desire to make an impact, such as with socially responsible investments, allowing younger family members to have “a seat at the table.”