Entitlement in Family Business – Continued

Entitlement is also exacerbated by changing lifestyles (that get better and better with the growing business) and attendant pressures of social comparison and the need to live up to or above one’s peers.

Most of the times, it is because the family member is immature in his or her approach to wealth. He has no inherent value for money, except in terms of what it can buy for him. When money grows faster than the ability to manage it, entitlement is inevitable.

For example, the son of a wealthy family business client wanted to become a Director in the company, immediately after graduating and getting his B.Com degree. When his immature wish was not granted, he took the family Benz on a dangerous high-speed spin, blackmailing his father on the phone into giving him the directorship.

From our experience, entitlement is not just a behavioural issue that can be brushed away but a deeper value-orientation issue that has serious repercussions for the family business.

Entitlement is like a communicable disease that spreads when unchecked. It has the potential to cause both tangible and intangible capital erosion of the family business. At its most benign, it affects the financial performance of the business. But in its malignant form, it destroys the brand equity of the family, impacting ability to raise investments, sabotaging relationships with external partners, undermining employee morale and turnover.  It is also a serious symptom that the business is short of future leaders who can continue to build it. Moreover, when there are a set of people who have a value orientation, working with another set with consumption orientation, internal clashes are inevitable that might eventually break the organization. This is one of the primary reasons why many family businesses do not survive beyond the second generation.

Therefore, family business founders would do well to recognize this problem and consciously invest in building the human capital of the family, grooming the next generation in the right values so that the core of the business stays healthy and their vision lives on.

At FABRIC, we have helped several families fix this problem and turnaround their fortunes with effective and powerful processes that work from the root up.

Read more:

6 ways to build your family’s human capital 

5 indicators that your family business suffers from an entitlement problem

 

Keywords: human capital, entitlement, brand equity, employee morale, value orientation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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