In one of my recent governance and succession talks with business owners in Singapore, I was asked by a high net worth (HNW) entrepreneur, “I’m 69 years old, contemplating retirement for the past 5 years but worried for the future of my enterprise.”
By Enrique Soriano
He continued, “I started working at 13, and I don’t see anyone in the second generation who is willing to go the extra mile, make sacrifices, unlike [in] our generation where we would always instinctively think about survival because we were poor. Do my children have a right to my wealth?” My reply was quick, “In the first place, who led the children to this false sense that your wealth is their birthright?” The gentleman stepped back and the room fell silent. I gamely assured him that he is not alone.
Clearly, more and more business owners are expressing concerns about a cancerous sense of entitlement among their next generation successors. Family business expert Jeff Faulkner once warned business owners, “Entitlement issues are rampant in family owned businesses. It is a stealthy and dangerous disease that can have a widespread and prolific impact on our business culture, as well as at home. How do we keep it from becoming an epidemic in our business and family lives?”
Transitioning a business is a once-in-a-lifetime event and any unplanned, hasty judgement on succession can take out a business overnight. When you are planning on retiring soon, then having someone ready to take over the business is undoubtedly very important. However, it is not an easy task. The family business ecosystem is so complex and naturally confusing. It is further aggravated when family members are actively working in the business. An enterprise with several family members has twice as many opportunities for conflict, misunderstanding and resentments. Therefore, teamwork is essential and effective communication is critical in aligning the entire organization to the succession objectives initiated primarily by the visionary, governance adviser and the family members.