Case of Spoiled Owners, Part 2

Tom Crouser June 22, 2012 Comments Off on Case of Spoiled Owners, Part 2

By Tom Crouser

Spoiled attitudes are also sometimes prevalent in unique ways among couples in business. Let’s say Momma has an inheritance and Pop is playing business, which I define as having a goal other than creating wealth. What kind of goal? Oh, more sales for the heck of it, bigger equipment than the other boys, bigger building or bigger and better something or other. Doesn’t mean that’s undesirable, just means it’s undesirable if it is the goal. Our businesses are but a means to a goal and not the goal itself. The goal should somehow create wealth in some form for the family.

Now if the goal is creating a bigger ego for Pop, the whole process can get off course. And it will get knocked really for a loop if Pop is spoiled. Why? He sometimes does whatever it takes to prove that he needs more of the inheritance money put into the business without the business performing. And if he will do that then he will also destroy the business and the inheritance in the process in order to prove himself right.

Couple these conditions, where everything must go perfectly (financially) or the house of cards falls, with a spoiled attitude and is it any wonder that there is fear in the workplace? Would you work there?

Other spoiled owners who are inheritors-in-waiting never change their lifestyle regardless of the business consequences. Usually this is seen in businesses that are under performing but yet have owners who constantly make decisions that keep them from performing.

Like what? Instead of fixing the business with the time required to do important things, we choose to spend a month in Europe for the kids’ sake. Or having negative cash flow but choosing not to do anything about it because it interferes with the family’s annual vacation trip to Maui.

Then we wonder why our workers don’t do what’s most important. Usually it’s because they see us doing the same thing and follow our example.

But spoiled attitudes are not the exclusive domain of owners. We’ve also seen them in the children of owners in the business.

One in the lucky gene pool wonders why they have to prove themselves. After all, they’ve been given a job by the parent, never have held a similar responsible position outside the family firm and are about to be put in charge of the destiny of the twenty or so families whose main livelihoods come from the business. Are they ready to assume command? They say they are but they’re really about to make the same mistakes the parents made in triplicate.

What mistakes? Dr. León Danco of the Center for Family Business in Cleveland says most that start business know how to make something or do something and will figure out the business part later. Well, if that’s good enough for Mom and Pop, shouldn’t that be good enough for junior? No. Difference is Mom and Pop didn’t have a company with a couple million in sales given to them and twenty or so families depending on the skills of the leader.

Fact is, each generation stands on the shoulders of previous generations and it’s the successor’s responsibility to know more than the predecessor knows. But that’s not to be confused with knowing what the predecessor knows.

The successor logically will be better schooled in the principles of finance, accounting, business law, personnel, sales, family-based business, operations and the principles of the business that the business is in (printing in this case). Now this isn’t always possible from day one, so an augmentation would be for the successor to be trained in any lacking disciplines. In addition, the successor will never know what the predecessor knows and that’s why it is important that there be a period of time where the successor proves themselves in various positions within the company in addition to having studied the necessary principles.

Well, what if they don’t wanta? Worse yet, what if they don’t want to do it and are spoiled? If they don’t get their way there will be hell to pay from the child’s point of view. What can the child do? Plenty depending on how undisciplined the parents were in running the business.

One owner wanted to retire but had to sell the business in order to do it. Junior was the spoiled salesperson who was never managed properly and who had picked up the company’s major account through no effort on his part. Since dad was undisciplined himself and involved himself with customers as little as possible, Junior had a free ride for years. Now, dad and Mom have to sell the business to junior in order to retire or to sell it to someone else. Only problem is junior tells them he’s going to take a walk with the big account if they sell it outside and he doesn’t want to pay them very much.

Oh, yea. The owner above is in their later 70’s and really doesn’t have much choice other than to let junior have his way.

Spoiled is doing what’s most fun rather than what’s most important and then getting mad when things don’t go your way. The result of spoiled leadership or spoiled successors is that it’s hard to maintain an adult working atmosphere, retain or attract new workers, or even get the next generation in the same family to act like adults. As Sun Tzu would advise, “Eliminate this in yourself.”

Tom Crouser

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