Want to know what keeps the owners of the most successful family businesses up at night? The dread that their kids will grow up to be entitled.
This is the concern of most parents, but among the very wealthy, the anxiety can be sometimes paralyzing: Will their children and grandchildren end up lazy, good-for-nothings, who are not contributing to society? In other words, “trust fund babies,” the kind whose scandalous antics fill the pages of the New York Post.
That’s not paranoia; the fear is grounded in reality. In business families, it’s quite common for the next generation to grow up in a much wealthier environment than the current generation. The problem is not limited to them. A study of over 3,000 families found that when wealth is passed from one generation to the next, a whopping 70% of it is squandered. Speaking generally, wealth is a very difficult thing to manage well.
That said, in reality, money turns out to be a less important factor than one might think in the development of entitlement. Some very rich kids turn out to be highly motivated and engaged – we see this in our work every day. Our experience also suggests, however, that kids don’t mysteriously end up entitled; there are some common choices parents – all parents – make to a greater or lesser degree that substantially increase the odds that kids end up feeling that the world owes them a living. These choices are often made with the best of intentions, but they work against the long-term interest of our children.
How do you avoid the entitlement trap? There are no pat answers. What we learned from our work with family businesses is that you can start by asking yourselves questions. This is not a scientific formula, but the more “no” answers that are scored, the greater the likelihood that you are putting your children on the path to entitlement:
- Do they hold down jobs? Kids that have jobs – even part-time or volunteer jobs – are more successful, both personally and professionally, than those who don’t. In an informal study of what people shared who made it to the C-Suite, one major American bank singled out height and summer jobs. There’s not much you can do about height, but work brings enormous discipline and learning. Jobs are also tremendously grounding, psychologically: they keep kids from being bored, one of life’s great vices. What we also see with glaring clarity in our work is that parents are blind to the strengths and vulnerabilities of their children. It’s hard to be objective. Jobs give your child the chance not only to gain experience, but als0 to get honest feedback. Reality is one of the best ways to combat a false sense of entitlement.
- Can they build careers? Sometimes the next generation just can’t get traction, and they’re not entirely to blame. Alarmingly, in about a quarter of the client situations we work in, we see adult children being set up to fail. Owners sometimes give members of the next generation hopeless assignments – for example, they are asked to turn around a losing business that has no chance of becoming profitable. Typically, this is done out of a desire to have the adult children understand, even relive, the experiences of the parents, who have almost always had to overcome tremendous challenges in order to succeed. The same thing can happen outside a family business, when adult children are forced into careers and professions in which they have no interest, and often no talent. Not surprisingly, they often don’t do well. Paradoxically, too much disappointment can also lead to entitlement. When even our best efforts are not good enough, it often seems better to just sit back and wait for life to be delivered to us on a silver platter.
- Are they allowed to suffer? Life is like the stock market: it’s up and down, and there is risk involved. Don’t set your kids up to fail, but don’t shelter them from fate’s hard knocks. Let your children feel the pain – it builds resilience. Indeed, research shows increasingly that resilience flourishes in an environment of tough love. But don’t make your kids suffer too much either. The best way we’ve seen wealthy family business owners help out their grown children without creating a sense of entitlement has been to provide assistance with education and housing. The owners of a very successful family business we work with hold back dividends but have a large educational fund that pays everyone’s schooling. They also help out with “reasonable” housing costs. After that, everything else is the adult child’s responsibility. This discipline wonderfully concentrates everyone’s mind on the vital difference between wants and needs, and nips entitlement in the bud.
- Are they grateful? Recent studies show that there’s an inverse relation between materialism and gratitude. This poses obvious challenges for families that enjoy great wealth. In her pioneering work on the subject, British psychoanalyst Melanie Klein wrote that, without gratitude, there can never be any personal satisfaction; envy creeps in and desecrates everything. We all have something to be envious about, even the very rich – sometimes especially the very rich – but envy is a toxic emotion. Gratitude can soften it, and Klein thought that gratitude was inborn. But new findings on gratitude show that it can also be taught. The key is that parents must model gratitude before kids can develop it. That takes work. Practice gratitude yourselves, and chances are that your children will end up thanking you for it. That’s the first step out of the entitlement trap.
Much more can be said on many fronts, and we look forward to your comments on this issue. But one last word: in our experience, the way that the most successful business families curb the next generation’s sense of entitlement is by staying involved in their kids’ lives. If they fail to get some quality time, your children turn to money as the next best substitute. That sounds trivial, trite, perhaps even a platitude. But every child is entitled to love. The rest is gravy.