Integrity Matters
March 14, 2007
Family's good fortune demands stewardship
Question: (E-284)
Dear Jim:
What destroys family businesses?
Response:
Family businesses fail because of greed, jealousy and incompetence, alongside a lack of trust and integrity. Family member "bystanders," who conclude that their birthright is to live off of the accomplishments and residuals created by others, stop investing in the enterprise.
The founders' compelling drive to support the entire enterprise is replaced by a singular focus on financial performance.
Unfortunately, a destructive number of third-generation members demand dollars to sustain comfortable lifestyles, with little regard for the organization's customers, suppliers, employees or even the communities in which the enterprise operates.
These "genetic lottery winners" sidestep hard work and social responsibility, becoming the idle rich, if only until the money runs out. Family business failures, in the third generation, reflect the selfishness and short-sightedness of those who inherit. And, the parallel could be drawn to those who are given, as a birthright, citizenship in a noble experiment, such as the United States of America. There are no guarantees for those who are irresponsible stewards of inheritance - economic, political or cultural.
But self-destructive cycles need not be repeated. Faith, courage and liberty create abundance. Founders of nations and family enterprises epitomize the benefits of intellectual and moral integrity, enthusiasm, hard work, dedication, sacrifice and the commitment to goals that extend beyond self. Family businesses often get started by high-energy, single-minded (some might even say hard-headed) entrepreneurs. Founders risk health, wealth and security to "try" something new. Over time, the financial rewards grow, enabling subsequent generations to participate and benefit from the enterprise. It is at this success point that two predictable and damaging behaviors all too frequently emerge: entitlement and arrogance. So, what can be done?
To overcome the third-generation jinx in a family business or the 200th year of a democracy, forward-looking and responsible recipients must:
- Provide appropriate organizational performance skills or retain those who can.
- Protect the organization's viability by serving the common good before self.
- Preserve, through personal example, the integrity-centered values that enabled founders to launch the enterprise, including prudent financial stewardship
Integrity matters!
