The Patriarch Paradox: Building (and Breaking) Self-Esteem

2004-08-17T13:46:00.000-07:00

As previous readers of The Silver Spoon have commented, the dedication that entrepreneurs have to their family business can oftentimes have negative effects on the business of family. Self-esteem (or the lack thereof) is often an issue among children of entrepreneurs.

Why? Self-esteem is a game of confidence, of belief, and of reinforced behavior. Unfortunately, it is human behavior to catch our kids doing things wrong versus catching them doing things right. Ironically (or perhaps not), the children of entrepreneurs oftentimes repeat their parents mistakes. They oftentimes are too busy catching what their children are doing wrong versus what they are doing right. Fathers fire children, children fire their children. What follows is a self-fulfiling prophecy -- kids work harder in order impress dad (or mom) in order to gain the self-esteem they still do not have. Age is irrelevant...15 or 50. I have a client in his mid-40s, college-educated, who runs a multi-million dollar business. He is still in search of his dad's acceptance. Will he ever be good enough? Will he ever be able to see the future like his father? Will he ever have the financial success that his father has had?

These are not uncommon questions in family businesses. If you are a patriarch in your family business, it is not too late to build self-esteem among your children (regardless of age). While building self-esteem is very a much a personal exercise, there are ways that you can support your children as they seek to build self-esteem:

1) Catch them doing something right. If a child is responsible for operating a business unit and/or business function, take time to praise him/her for doing things right, for thinking creatively, and for finding opportunities to blaze his/her own trail.

2) Let them fail. Remember, when you were a young executive, you made your fair share of mistakes, but I'm sure you learned from them and will most likely not repeat them.

3) Don't overpay them. Due to our arcane estate planning laws, many families will accelerate cahs payments to their kids in order to avoid large tax payouts at time of death. However, there is a negative side effect to this strategy -- particularly when kids do not share in the equity/dividends of the business, but rather only take a salary (albeit a very large one). The negative impact is that kids do not feel worthy of the salary particularly when they know that if they were to leave the company, they would earn only a fraction of their current salary.

4) Let them bake their own cake...and eat it too. Oftentimes the children of entrepreneurs are responsible for making what dad made, better, rather than creating their own future. Give the kids the space to build something on their own. If the Hilton Sisters can do it, anyone can (e.g. they're worth millions on their own doing, not that of their inheritance).

While it is fundamentally up to the kids to build their own perceptions of 'self', hopefully these efforts will help you help them come into their own.

2004-08-12T19:01:00.000-07:00

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The Leadership Legacy

2004-08-12T12:04:00.000-07:00

Consider this, according to research conducted by The Loyola Family Business Center:

85% of all American businesses are family businesses
60% of the GNP comes from the contributions of family businesses
50% of America's workforce is employed by a family business

However, only...:

25% of family businesses survive to the 2nd generation
13% of family businesses survive to the 3rd generation

Why does this happen? Could it be because...:

66% have no strategic plan -- OR because
33-50% of CEO's expecting to retire in the next 5 years have not chosen a successor

Or is it due to something much more intangible:

Dad (or Mom) doesn't know how to stop working
Dad (or Mom) doesn't have faith in his/her kids' ability to lead
Kids have no interest in inheriting the responsibilities of the business
Others?

While each of these issues presents a unique challenge, perhaps the greatest challenge is in getting the incumbent family leader to endorse leadership succession. Quite simply, getting Mom and/or Dad to let go.

As this is the inaugural posting to The Silver Spoon, what better place to begin than with a question...how do you get the incumbent family leader to let go?