The journey of an entrepreneur is mixed with sweat, blood and occasionally tears. Entrepreneurship doesn’t come with a manual or a set schedule. It requires an undivided focus, often at the cost of personal and family life. The bigger purpose of creating something meaningful keeps the entrepreneur going, often for decades.

Fast forward to when the rising generation joins the business and begins to question everything. Often disagreeing with how business is conducted. At times, joining in with a different work ethic. Differences in opinion and working style may lead the founder to question the contribution of the rising generation and label them entitled.

While this may hold true for the rising generation, the founding generation is not entirely without fault. The very contributions that are foundational can, paradoxically, evolve into “founder entitlement”.

What is Founder Entitlement?

Founder entitlement is an unconscious belief held by a founder. It is based on their role and contribution to the business. Entitlement manifests as the inherent right to control, benefit from, or influence the business in ways that may no longer align with its best interests.

Entitlement is rooted in deep emotional attachment, identity, and a lifetime of making unilateral decisions.

How Does It Manifest?

Founder entitlement can show up in various ways, subtly or overtly:

1. A reluctance to delegate authority, empower the rising generation, or step back from day-to-day operations, even when the rising generation is capable and ready to step in.
2. Continuing to make strategic business decisions without consultation.
3. Managing finances in a way that harms rather than benefits the company.
4. An inability to trust others to perform, leading to constant interference.
5. An emotional attachment to the legacy way of doing business despite better methods and models.
6. Holding on to people out of a sense of duty or obligation for their contribution during the early days of the business.
7. The founder’s self-worth and identity are linked to their involvement in the business

The Damaging Impact

While it is typical for founders to have some form of entitlement, unchecked founder entitlement can affect all three circles of the family business system. The business system can face stagnation, missed opportunities, and declining competitiveness due to the reluctance of the founder to embrace change, over time spilling its negative impacts onto the ownership cycle. The family system witnesses resentment between generations, demotivation, and eventual disengagement.

Why Does It Happen?

To tackle entitlement, it is important to understand its sources:

• The business is often the founder’s “first child” and represents a lifetime’s worth of investment.
• For many founders, the business is an extension of themselves.
• Founders fear that if they step away their wisdom and experience will no longer be valued or needed.
• Without interests outside the business, an exit from active management seems overwhelming.
• A belief that no one else can run the business as effectively as they can.

Strategies for Mitigation and Prevention

Addressing founder entitlement requires awareness and subsequent effort, often best facilitated by an independent advisor:

For the Founding Generation

1. Invest in interests outside the business and develop a “Next Chapter” plan after full-time business involvement.
2. Gradually step away from being the primary decision-maker to a mentor for the rising generation.
3. Walk the work ethic talk. Do what you expect from the rising generation, even though you may feel you have done enough and deserve ease.
4. Work on listening skills and resist the urge to interrupt or correct. Rather, listen with an open mind and take time to mull over an appropriate response.
5. Appreciate that empowering the rising generation may not be a smooth ride. It is a gradual process requiring patience and acceptance that mistakes will happen.
6. Remember that business acumen is the outcome of experience and effort. The rising generation will get there in due course. Having great expectations without foundation likely sets them up for failure.

For the Rising Generation

1. Earning voice & influence in the business through hard work and demonstrated competence
2. Seek first to understand the legacy business model and resist the temptation to critique.
3. Before proposing initiatives, research the background of the problem to understand if the proposed solution has been applied or considered previously.
4. Inertia in a family business takes time to disrupt, and in a family business, slow is fast.

The Role of the Family Business Advisor:

An independent family business advisor can help founders overcome entitlement. They can:

1. Create a space and structured process for intergenerational dialogue. Many issues are a matter of perception rather than reality. Communication is key to developing clarity.
2. Remind each generation that what they are experiencing is in effect a rite of passage. It is perfectly acceptable to view the world with your own lens if one is willing to accept that multiple realities exist.
3. Design a working induction and exit plan, helping founders find a purpose outside of the business and the rising generation find their purpose within the business.
4. Offer an alternative view to thinking, challenging, preconceived or erroneous beliefs stemming from interactions in the family system.

Founder entitlement, while originating from a place of dedication, can unintentionally impact the business. By recognizing its manifestations and proactively addressing them , family businesses can ensure that a culture of accountability replaces entitlement.