Webster’s describes entitlement as “the belief that one is deserving of certain privileges.” But when it comes to family businesses, a sense of entitlement is more than feeling “owed” or “deserving,” it’s about expectation as well. Indeed, usually the problem isn’t the feeling of entitlement; it’s how family members act, and how such actions are perceived by others. The consequences can be dire.
Consider the human resources director in a family business whose efforts at building a culture of responsibility and accountability become marginalized when members of the younger generation fly off for vacation in the corporate jet the same day there are staff layoffs. Or the payroll clerk who’s been asked to implement pay cuts for everyone but the family members — do you really think she keeps that information to herself?
How did we get here? Baby Boomers achieved staggering financial success in their family enterprises; their upward mobility, getting through the Great Recession, is truly remarkable. Many Boomers, with conservative portfolios and minimal debt, were barely affected by the recession. They raised their children as they wished they had been raised — skiing trips to Vail every Christmas, then to the family condo in Puerto Rico over spring break. A recent drive through the high school parking lot in an affluent suburb revealed as many Range Rovers, Mercedes-Benzes and BMWs as in the local country club lot. Wanting their children to have all the trappings of the good life, parents help their kids buy homes and even furnish them; they set up trust funds and 529 college savings plans for their grandchildren. And in these actions, there lies an expectation — that this might go on forever, that there’s a bottomless well somewhere.
Generation Xers will soon be on their own, and for many that newfound independence will be startling. Those in their 20s and 30s planned their careers with the anticipation that the numbers will simply keep going up. Many expected that they’d be able to take the same luxury vacations with their children as they’ve enjoyed with their parents. For most, however, it just won’t happen. Thanks to the economy, “forever” seems to have come to a screeching halt. Gen Xers may inwardly — and some even openly — resent their parents for the derailment of the gravy train. Meanwhile, the kids from Generation Y, despite a college diploma, have fewer career options than their parents. As a result, many of these kids turn to the family business as a natural source of opportunity, and see employment in it as their right.
How can we stem the epidemic of entitlement? If business families hope for their business to prosper and not simply survive through another generation, rigorous entry criteria are no longer options; they are essential. To succeed in an extremely competitive marketplace, the next generation of business owners needs outside work experience, additional degrees, qualifications and personal attributes that exceed the norm, a passion for the business, a sense of stewardship and respect for the contributions of their seniors. The senior generation must clearly define the younger generation’s roles and responsibilities, keep compensation at fair market value and make sure their offspring have a mentor-coach-guide. Additionally, family members must speak directly about entitlement, and how the perception of an entitlement attitude affects non-family colleagues.
Being the scion of a business family can carry handsome privileges – but it should be made clear that it also carries great responsibility.
