Sometimes thoughts of entitlement grow so entrenched that family members believe they have the right to use company resources without permission or to direct company employees even though they have no direct management responsibility in the organization.
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Is there someone in your organization or family whose belief in their own entitlement is causing problems?
by David Lively
“I’m tired of pretending like I’m not special, like I’m not a bitchin’ rock star from Mars.” - Charlie Sheen.
Many of us—particularly those of us with a TV, radio, newspaper, internet connection or heartbeat—have been appalled by the behavior of Charlie Sheen, star of the leading sitcom Two and a Half Men. Sheen is accused of drug-induced meltdowns that have led to two divorces, time in jail, time in rehab, the destruction of multiple hotel rooms, and the loss of custody of his children. What is perhaps most upsetting about this situation is the unbridled sense of opportunism and entitlement suggested by Sheen since he was terminated by his employer, CBS, after his most recent tirade.
Entitlement, however, is not unique to Hollywood. Entitlement rears its head in family furniture businesses, too.
To be “entitled” is to have rights and qualifications to something. An entrepreneur is entitled to reap the benefits of the effort, energy, enthusiasm, and dedication it took to build the family’s wealth. However, a person with an improper sense of entitlement expresses demands for benefits which are out of alignment with their contributions, and demonstrates no respect to those responsible for an organization’s success. This is the petulant child who thinks their last name is the only title they need to earn perks and prestigious positions.
Sometimes thoughts of entitlement grow so entrenched that family members believe they have the right to use company resources without permission, or to direct company employees even though they have no direct management responsibility in the organization. Their attitude is like that of my friend who once took every penny out of the cash register in his father’s store. He left behind a note that read, “You still owe me $57 towards my next paycheck,” as he skipped school and headed to an amusement park.
Entitlement Trap #1
They Just Don’t Get It
Our daughter had a monogrammed uniform shirt and an inbox behind the front desk of our furniture store by the time she was in kindergarten. Many children of business owners are reared in the store.
They spend their formative years watching their parents and other family members running the business and interacting with employees. This can lead to a mistaken belief that authority is a privilege of ownership instead of a position that is earned over years of hard work, planning, and proving their wisdom in decision making. When they finally enter the company in an entry level position, they may imitate the same authoritative behavior they’ve witnessed in family members who have earned their position. This often ends disastrously as non-family employees are tempted to shove that silver spoon of entitlement right down that bossy family member’s throat.
Sometimes family shareholders act entitled because they don’t understand or haven’t been taught the roles that they are expected to fulfill in the family business. They inform the upper-level non-family warehouse manager about their “real” job description, expectations the family has for them, and how they should do their job.
I've seen family shareholders who don’t even work for the family business come to a corporate location and demand to use company resources and advise employees in how to behave.
Solution: Such role misunderstandings can often be clarified by simply talking to family members about boundaries of appropriate and inappropriate behavior.
Entitlement Trap #2
Because it’s Fair
At home, parents are expected to love each child equally and treat each child fairly. Everyone gets the same thing for dinner, they all take the same vacation, and everyone does chores. Parents who play favorites don’t get away with it for long, but wise parents do recognize and encourage the unique skills, abilities, gifts and passions of their kids.
But when the emotional aspects of love are mixed with family business ownership or employment, the concept of equality becomes warped. When this happens, siblings or cousins demand equality in compensation, fringe and other benefits, whether or not they are involved in the business.
These demands, based on fairness, can progress to the point where efforts by a parent to help out any one child are met with demands by other children to be equally “compensated.” When children are taught that all rewards from the family business will be equally distributed, a brother who doesn’t work in the business will demand the same compensation as their GMM cousin or their CEO sister. In reality, not all family members are equal in abilities, nor are they equal in the roles that they play. An employee is rewarded based on their responsibilities and performance, not their birth certificate.
Solution: It’s critical for the family to differentiate areas of life where equality among family members is to be pursued (for example love, appreciation, helping family members in need, inheritance) and areas where equality will not be pursued, such as compensation in the business. If employment in the business is open to all who are qualified and meet requirement expectations, then the family may have equality in opportunity, even though the actual compensation will be different for each family employee depending on their positions of responsibility in the business. We have found it especially helpful for families to explore how the concept of equality came into being within their family, to discover the strengths and weaknesses of trying to make all actions “fair” all the time, and to agree on a new system of addressing fairness issues going forward as family, as employers, and as business owners.
Entitlement Trap #3
They Hate Their Job
A shareholder who inherits the company may feel trapped and locked into ownership. This feeling of being “stuck” can lead to an underlying bitterness about the lack of adult freedom to choose their educational path, where they live, and finally their career. The internal desire for “freedom” is sometimes camouflaged as disgruntled demands for time off, exorbitant pay or decreased responsibilities. I have personally dealt with situations where behaviors of entitlement are actually pleas to exit ownership and to allow the freedom to choose that exit.
Solution: This scenario should be addressed through a candid discussion with the family member who is dissatisfied with their role, preferably with a neutral party such as an outside advisor or an owner who is not involved in the business.
Entitlement Trap #4
They really are Entitled
CEO’s frequently claim that shareholder requests are behaviors of entitlement, when in reality shareholders are being purposefully kept in the dark about corporate performance and allowed little say in any matter of the family business. They aren’t permitted to have a voice in establishing the board of directors which will oversee management, even though shareholders have that legal right.
From mom-n-pop stores to Fortune 500 companies, shareholders of companies large and small expect that their stock will earn a return over time. Shareholders rightly expect management to run the company in a way that produces financial benefits. An investor should also expect that there will be ups and downs in any investment; as a result, they should not be surprised if the performance of the company rises or falls with market conditions.
A shareholder acts unreasonably entitled when they demand returns without consideration of the economic environment. Uninvolved shareholders in family businesses sometimes have very little understanding of what it takes to produce a good return and run a strong company. Regardless of their contribution, they often have elevated and erroneous expectations of a reasonable return on an investment.
Solution: Conduct ongoing shareholder meetings to produce informed and appreciative shareholders. Allow time to review financial performance, provide explanations of allocation, and discuss profit and loss. Leadership that won't provide accurate information will eventually lead shareholders to assume that inappropriate actions are taking place. Distrust due to a lack of transparency will create excessive demands for information from shareholders.
When information flow is forthcoming and shareholders are kept in the loop about the nature of their investment, a focus of realistic expectations is more easily gained. As a result, peace within the family shareholder group is easier to maintain.
Because shareholders in family businesses often represent multiple generations, the goals for their individual families can differ wildly. One family may be raising children and saving for college tuition while the other shops for a second home and gets ready for retirement. There are companies that have never paid out an allocation to shareholders despite years of successful earnings. Often this is because the leaders want to grow the business through reinvestment, and taking dollars out of the company is viewed as an obstacle to growth. Unless a shareholder group has agreed that keeping dollars in the company is an ownership goal, it is likely that shareholders appropriately view their ownership as an investment that will provide an ongoing and immediate return. Setting expectations as a group is a critical step to managing family emotions as they pertain to money. Once these expectations are expressed, management should have the authority to operate within the parameters defined by owners.
The opposite of inappropriate entitlement is gratitude. A person who demonstrates an attitude of gratitude appreciates that which has been given and understands the underlying qualities of the gift received.
Each of these approaches to entitlement outlined in this article can help a family experience a greater sense of gratitude. Of course shareholders should have expectations. But expectations should be overt, shared and corresponding with their contribution.
"I will not believe that if I do something then I have to follow a certain path because it was written for normal people. People who aren’t special. People who don’t have tiger blood and Adonis DNA." -Charlie Sheen
There’s no Adonis DNA in your family tree, even if certain family members think they're entitled to “special” treatment. What will become of them, and to Charlie Sheen? While we have no idea of the final outcome of his antics thus far in 2011, what we do know is that entitlement is intolerable to everyone.
David Lively, partner at The Lively Merchant, has over 20 years hands-on experience in the home furnishings industry, from the warehouse to the sales floor to the boardroom. He has walked the walk and talked the talk from the family-owned, single-site store to the multi-state, multi-million dollar operation; from sales training to computer programming; from warehouse construction and operations to financial management; from new store construction to complete renovation. Twice named to the "Beyond the Top 100" list of independent retailers and 1997 "Ohio Retailer of the Year,"
His battle scars have given him compassion for counseling today's retail warrior on issues of the transfer of authority, responsibility and wealth from one furniture store generation to the next generation. His system helps to identify goals, strengths and opportunities during this crucial time.
Read more of David Lively’s articles posted to the furninfo.com website. You can reach him by calling 740.415.3192 or email him at davidL@furninfo.com. David has offered free phone consultations to any FURNITURE WORLD readers who would like to talk about topics related to family business transition.
David Lively, partner at The Lively Merchant, has over 20 years hands-on experience in the home furnishings industry, from the warehouse to the sales floor to the boardroom. He has walked the walk and talked the talk from the family-owned, single-site store to the multi-state, multi-million dollar operation; from sales training to computer programming; from warehouse construction and operations to financial management; from new store construction to complete renovation. Twice named to the "Beyond the Top 100" list of independent retailers and 1997 "Ohio Retailer of the Year," David's wisdom was won on the front lines of a furniture store and his battle scars have given him compassion for counseling today's retail warrior. David’s experience has led him to address the issues of the transfer of authority, responsibility and wealth from one furniture store generation to the next. The surviving legacy of your family business depends on your plan for transition, and David has developed a system for helping to identify goals, strengths and opportunities during this crucial time.
Read more of David Lively’s articles for family furniture businesses on the furninfo.com website. You can reach David by calling 740.415.3192 or email him at davidL@furninfo.com. David has offered free phone consultations to any FURNITURE WORLD readers who would like to talk about topics related to family business transition.
View all articles by David Lively