Earlier this year, Fairport and The Cleveland Foundation hosted clients and friends at a luncheon on Avoiding “Entitle-itis” in Your Family Enterprise with guest speaker Kirby Rosplock, PhD.
The view of wealth to the rising generation(s) in a family business, or enterprise, is largely based on messaging from their elders. Below are Kirby’s 5 keys to avoid entitlement and help mold, model, cultivate and guide the next generation.
It is important to build children up, so that they can handle failure from a young age. Teach them to be resilient by delaying gratification and providing learning opportunities. Children and young adults need to understand the difference of self-worth, versus net worth, and that affluence does not make them special. It is also important to discuss the price of privilege; with wealth comes responsibility. Another suggestion is to surround children with positive role models, peers and mentors to guide them along the way.
The most influential people in a child’s life are their parents. Parents need to understand that the way they act, talk and treat others will be copied by their children as they build their own relationships. Ask yourself, how do you show up? How does your family’s culture help or hinder behavior? What do you link back to your own beliefs around wealth and stewardship?
Philanthropy can be used as a bridge in building a stewardship lens for children. It can connect the younger generation to opportunities that they are passionate about and associate meaning with money. Many of these experiences can also provide educational and leadership opportunities.
Kirby recommended that families cultivate “Family Champions” and identify these potential future leaders of the family early (young adulthood). Family Champions are defined as a rising generational leader who acts as a catalyst among the non-operating owners to bring them together as stakeholders and to engage in effective ownership. The goal is to create family continuity from generation to generation, and establishing “Family Champions” is a best practice to facilitate the desired continuity.
There are many different types of family governance structures that may be utilized. In order to decide which is correct for your family, you have to ask yourself the following questions:
- What values do we, as a family, share?
- What is the purpose of our wealth?
- What will successive generations need to know to properly steward?
- What is the collective familial dream in 5, 10, 20, 25, 100 years?
- Where are we in the stages of family governance?
- How would we describe the family culture around governance?
- What do we make collective decisions on?
- What policies make sense?
- Where are we headed and what policies may we need?
- Who needs to be involved?
Conducting Effective Family Meetings
It is important to plan in advance for each family meeting, in order to obtain buy-in and family member commitment. Kirby suggests that having a clear focus on outcomes is vital to preparing the agenda for the meeting, and the best meetings are often held in an environment that is “safe” (neutral and unbiased). They are also an opportunity for all family members to be present, so that you can engage as many as possible. Lastly, the use of a “parking lot” is an effective tool to table issues that may arise for future meetings and discussion.
If you’d like to further discuss “entitle-itis,” or any specific challenges you are facing in your family business, please contact a member of your Fairport team or family business practice group leader Andrew Connors at 216-431-2754.