We all know the phrase “Rags to rags in three generations”.
This cliché encapsulates the challenge for wealthy families in getting the next generation to engage with the family assets, whether they be a business, a property portfolio, an art collection or something else. Other challenges include showing them how to steward them responsibly so that they are maintained and increased for the benefit not just of the current family, but also of future generations. This should be part of the normal process of succession planning, but obstacles often get in the way, such as conflicts within the family or between generations, a reluctance to divulge information or a desire in the older generation to cling onto control.
It is a given that each family member will have his or her personal viewpoint and priorities which are a potential source of conflict with the others. What can be done to bring them together and give them a common purpose? It’s not just about making money; it’s about how to make a meaningful contribution. Three useful steps to consider would be:
- Agree what the family stands for in its business, its local community and in broader society;
- Agree what the family would like to give back;
- Enshrine the family ethos in a visionary set of principles and objectives that everyone can support.
One of the successful US family companies is S C Johnson & Son Inc, the makers of Johnsons Wax, which has grown from local roots in Illinois to become a worldwide business. The company has been guided by certain basic principles since its foundation in 1886, essentially based on earning loyalty and goodwill amongst its staff and customers and contributing to its communities. These principles were formally stated in a comprehensive mission statement called “This we believe” which has been communicated both within and without the Johnson Group.
If the family can articulate what it stands for, it can plan how to use some of its wealth to promote philanthropic projects in which, incidentally, the next generation can become involved.
Philanthropic projects, which are detached from the family business, are being used as vehicles for encouraging communication within families and fostering discussion and collaboration between the generations. Nobody should be threatened by a good cause: the next generation can be given roles in which they will learn the skills they will need later if they join the family business; and there is undoubtedly a role for the older generation too when the time comes for them to retire from the business.
If you would like advice on articulating your family’s values and how to promote them, please speak with Stephen Morrall or your usual contact at MEUM.
MEUM supports Action for Children, a charity whose mission is to protect and support children and young people. It has a Family Philanthropy program through which it unites families over shared values and inspires the next generation to help vulnerable children in the UK. If this is of interest to you, you can find out more about how you can work with Action for Children by following this link: Family Philanthropy | Action For Children
