Written by Matt Henry

We often hear A/E/C firm leaders say something like this: “We’d prefer to transition our ownership internally, but Millennials just aren’t interested or willing to make the commitment to buying shares.“ Our experience, both in our business at Fehr & Peers and in our management consulting practice at Left Lane Advisors, says otherwise. 

In prior generations of ownership transition, emerging leaders bought shares more out of a sense of obligation and/or loyalty to the firm. More emotion was involved. They were so honored to be invited but didn’t always look closely at the more objective aspects of the decision such as return on investment (ROI), risk, and alternative investment options.

As with many other aspects of life and culture, things are quite different today and A/E/C firm leaders would do well to accept that reality with regard to ownership transition. Millennials and other emerging leaders of today will buy shares in your firm, but only if the following is in place.

• Track record of ROI that beats the stock market. Today’s emerging leaders grew up in an era that celebrated entrepreneurship and investing. Think Shark Tank, crowd funding, venture capital, 401k education, and easy online investing. As a result, they are far more investment-savvy than prior generations and will only invest if the ROI typically exceeds what they can get in the stock market.
• Purpose-driven culture in action. These days, most every firm claims to have a purpose-driven culture. Your emerging leaders won’t invest unless it resonates with them and they see it in action on a regular basis.
• Flexible work environment. Buying shares means making more of a long-term commitment to remain with your firm. They are in essence “losing” some level of flexibility in their career by taking this step. Therefore, in order to counter this sense of “loss,” they must see a great deal of flexibility within the firm — both in their daily work environment and in their longer-term career options.
• Trust demonstrated through transparency. Today’s emerging leaders also grew up in an era of abundant information and transparency. They see a lack of transparency by firm leaders as a matter of mistrust that manifests in two ways. First, they suspect that firm leaders have something to hide. Second, they feel firm leaders are unwilling to trust them with the information. Both are corrosive to firm cultures and demotivate everyone, not just the emerging leaders. And after all, who wants to be in business with someone they don’t trust and who doesn’t trust them?

If you find yourself wondering why the demand to buy shares in your firm isn’t as strong as you’d like, we encourage a hard look in the mirror around these four areas.