These are crazy times we’re living in right now—the world is in a pandemic, the stock markets cannot stabilize, and the Fed has cut interest rates to nearly 0% to try to save us all. Trying to figure out how to pass both your family and your business values on to the next generation is challenging enough, but now we have to worry about what that looks like in a “new normal” that doesn’t yet exist—and has never existed in our lifetimes.
But one thing can be certain: in unsettling and uncontrollable times like we’re living in right now, there is something we all have no matter what. Our values.
Study after study that research what the families inside family businesses wish they could pass down, show it’s always values and life lessons. Financial assets or real estate always come in last. In between, you’ll find things such as instructions and “wishes to be filled” and “personal possessions of emotional value.”
Think about that, from your own perspective. What’s more important to you? Passing down wealth or passing on values?
I’m willing to bet it’s the latter.
Passing on Values vs. Passing on Wealth
The way one generation passes on its values to the next usually reflects the same philosophy as the transfer of wealth. If someone passes on the value of compassion and service, they also will likely pass financial assets to charity.
This isn’t much different than any other generation. The challenge is that you have both values and financial assets to pass down and one has to have more importance than the other. There also should be, for lack of a better term, consequences if your values are not “valued” by the next generations.
For instance, my mom always said to my siblings and me when we left the house, “Remember who you are and what you stand for.” This is a loaded statement and can be lots of different things. But what she meant when she said it to us was, “Be kind. Be inclusive. Don’t bully anyone. Don’t cheat or lie or steal. Be careful when someone tries to talk you into something you know is wrong. And be safe.”
Of course, as teenagers, we didn’t always abide by those values (my brothers were a bit more, shall we say, naughty than me), but as we grew into adults, those values were instilled and we’re now passing them along to our children (and hopefully their children).
Avoid the Shirtsleeves to Shirtsleeves Problem
The challenge that many families in family businesses face, however, is they’ve been mostly focused on the transference of wealth and don’t realize how important the transfer of values is until well into their senior years.
Ellen Perry, the founder and principal at Wealthbridge Partners, says she has learned five valuable lessons in working with clients about passing on values.
- Values are caught, not taught.
- Values are different from beliefs, preferences, choices, and principles.
- Leading a life that is consistent with your values is the greatest predictor of happiness.
- Storytelling is a powerful means of sharing your values.
- If the family is to flourish for multiple generations, the attention to human capital should be as serious as that of financial capital.
If the family is to flourish for multiple generations, the attention to human capital should be as serious as that of financial capital.
Ellen goes on to say:
I believe that if a family is to avoid the ‘shirtsleeves to shirtsleeves in three generations’ problem associated with wealth, the second or even the third generations must fully commit to the enhancement of the family members—their human capital.
To do this intelligently and successfully, they must work hard to maintain healthy family relationships. They must use their financial resources to enhance the life experiences and opportunities of each member of the family.
It is also essential that they welcome and integrate spouses into the family, identify and encourage the gifts that they each bring, and lastly, develop practices and policies that create healthy connections and decision making.
It’s Not Too Late!
If you are coming at this later in life, you can imagine—or perhaps are even experiencing—working on transferring values to adult children is an insurmountable task. It can be done, but it won’t be easy.
The good news is passing on values to the next generation(s) can still be done. It’s not too late.
According to Richard Eisenberg in a Forbes article, you can go the formal or the informal route to talk about what’s important to you after you’re gone.
Your options might include:
- Discussions during holiday gatherings about what’s important to you
- Bringing in a pro to help facilitate the conversation(s)
- Start demonstrating the values you want passed down by acting like a role model
There is no better time than right this second. The sky definitely feels like it’s falling, but the one thing we all have are our values. As we stress about where the bottom of this crisis is and what we might do as we come out of it, the conversations you have with your children and grandchildren right now can change the trajectory of your family business.
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