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Gagging on the Silver Spoon: How to Avoid Trapping the Next Generation in a Dead-End Role

Michael dreaded coming into work each day.  He had been working at his father’s manufacturing company for the past 15 years, ever since he graduated from high school and stepped in to run the small machine shop.  Over those years, his father, with a strong belief that Michael should take over the company someday, found every opportunity to move him up in the business, with a better salary and a better title.  He was now the VP of operations, but he relied heavily on a number of the seasoned employees who had watched him crawl around the shop floor in his diapers.  He had no business training, struggled to understand the finances as well as some of the most important aspects of scheduling, procurement and logistics.   Everyone he worked with knew that he only had that role because he was the boss’s son.  He wasn’t sure if he observed his co-workers disdain or if he just imagined it, but he felt it just the same.  He hated having to ask other people to help him and, as a deeply shy person, he hated having to be the public face of the company.  His father always included him in meetings with the bank or with significant clients – stressing to everyone that would listen that Michael was the future of the company.  Mike just looked down at his feet and tried to draw as little attention to himself as possible.

He often imagined what it would be like to work somewhere else – a place where no one knew who he was.  He liked to work with his hands and he liked to build things; he just didn’t like to manage people or try to manage the business.
 
Unfortunately, Michael is trapped.  He can’t afford to go anywhere else.  Because he earned a substantial salary as a young man, without the experience or education to justify it, he quickly became embroiled in a lifestyle that depended upon that income.  His kids go to a private school, his wife likes to drive new cars and his house is the largest in his community.  At this stage of his career, no one will ever pay him what he needs to maintain that lifestyle and his current role will never make him happy.  He is doomed to fail.

This is a sad and very common scenario.  Children growing up in family businesses are often trapped in the business because they have been offered titles and salaries that are simply not commensurate with their skills and education.  This can lead to depression, anxiety, drug and alcohol abuse and poor physical health.  The feeling of being trapped and having no control over one’s destiny can impact marriages, family relationships and future career choices.  Unfortunately, parents sometimes mistakenly believe they are doing their kids a favor by offering them a chance to skip the preliminaries, and simply enter the business on the middle or top floor. 

To avoid trapping the next generation in a life of constant failure, ridicule, low self-esteem and frustration, consider following these simple guidelines:

  1. Identify the core skills, knowledge and education that anyone who will someday be in a leadership position needs to develop now
  2. Work with your children to understand these competencies and put together a plan to help them to gain the knowledge and skills they will need. 
  3. If you hire your children, pay them a market rate, and ensure they are only given jobs that they are qualified to do.  
  4. Hold them accountable for their behavior and the expected results from that positon.  Don’t give your children special treatment, other than perhaps offering them additional opportunities to build experience. 
  5. Ensure your children have a mentor or a coach (other than yourself) who is able to provide candid feedback.
  6. Stick to rewarding your children with new positions and increased salaries only when they have earned them. 
  7. Make a clear distinction between being paid as an employee and being paid as an owner.  Your children can still benefit from company distributions and never actually work in the company.  If your primary concern is their financial well-being, consider setting up a trust that allows for distributions to be paid to family members, whether they work in the company or not.  In this way, their personal self-esteem is not attached to their work salary and they have the freedom to move into positions, inside or outside of the company, that are in alignment with their skills, talents and personal values.
  8. And finally, consider encouraging your children to work outside of the company before they take a key role.  Working in the family business should be an active choice, not just the line of least resistance.

Remember, sometimes our best intentions can end up negatively impacting those we love for their lifetime.  Stop and think about the consequences and consider taking a different path.  When we earn other’s respect, we develop our self-esteem.  When we don’t earn that respect, but demand it as a course of our title or position, this tends to destroy both our sense of personal value and our surrounding relationships.  A little planning can make the difference of a lifetime.

Lisë Stewart is Principal-in-Charge of EisnerAmper’s Center for Family Business Excellence within the Private Business Services Practice. Lisë has experience in organizational development, strategic planning and training, and human performance management.

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