By Prof. Enrique Soriano
Hong Kong hotelier and real estate developer Yu Pang-lin who died in 2015 at the age of 93, pledged his entire fortune – estimated to be worth US$1.3 billion – to a charitable trust he established in January 2009. In a gathering with his bankers and consultants five years earlier, he announced that he would entrust his entire wealth to a bank and the money would then be donated to charity after his death. Born in Hunan province, he was believed to be China’s first billionaire to donate an entire fortune to charity. He was also known for making generous donations to many charitable institutions. Yu attributed his desire to help others with his experiences as a young man, reflecting on the period in the 1940s where he worked as a journalist and an editor for a newspaper. It was during that time that he experienced first-hand (and wrote about) the struggles and hardships of people mired in poverty. He eventually moved to Hong Kong in the 1950’s, and made a living in the early years with many jobs just to survive, first as a cleaner and then as a construction worker. Yu later established his own property company, then expanded to other areas, including tourism, hotels and healthcare.
Money is harmful to an Incompetent Offspring
In one of his interviews, Yu was famously quoted as saying, “If my children are more capable than me, it’s not necessary to leave a lot of money to them. If they are incompetent, a lot of money will only be harmful to them.”
Having seen misery up close made him realize the dangers of exposing children to any form of entitled behavior. His message serves as a powerful reminder for business owners not to cultivate entitlement in any form. Children of affluent parents have never experienced hardship nor have they created an identity outside of the wealth and status of their parents. So when there is a triggering event like death, incapacity or misconduct among family members, it is highly likely that they may find it a challenge to develop self-confidence and forge healthy relationships when they are left on their own.
Having lived in comfort for years, these entitled children will inescapably fall under the sheer weight of giving up instead of forging ahead, quit instead of navigating through the many internal and external challenges and decide to sell the business at the first sign of sibling conflict instead of embracing family unity and stewardship.
But who is really accountable for the behavior of entitled family-members?
Without a doubt the fault lies on the founder/parent/owners. They play a major part in cultivating entitled family members given the following reasons:
- There is the natural instinct of parents/founders to “shelter” their children from the hardships that they themselves endured during the company’s struggling years. Every opportunity to safeguard and protect the offspring from any danger becomes second nature for the parents.
- Absentee and guilt stricken parents, especially those that focused on their businesses during their children’s formative years tend to make up for lost time by showering their children with material wealth instead of parental love.
- Nine out of ten business owners repeatedly make the grievous mistake of assuring their children that “someday this business that I built will be yours” or “everything I do and own will eventually be passed on to you.”
- Forcing the children to work in the company bereft of any experience and assigning them to positions of power because of their last names is a disaster waiting to happen. This will also lead the inexperienced children to emulate the autocratic style of their visionary parent effectively creating power struggles the moment the leader dies or becomes incapacitated.
- Lines are blurred. Business and ownership roles are unclear.
This scenario is a prelude to a Pandora’s box on steroids. Unless governance intervention is on the way, there is absolutely no doubt the business will suffer irreversibly. It is just a matter of time.