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IT’S (NOT AT) ALL
ABOUT THE MONEY
The Many Misunderstood and
Underexplored Manifestations
of Money in the Business Family
Research Report by
Dr. Anneleen Michiels & Dr. Claudia Astrachan
Foreword I
1
In popular culture, the portrayal of family businesses and business
families in movies and TV shows, such as Ridley Scott’s House of Gucci,
HBO’s Succession, and Paramount’s Yellowstone, novels, and news
articles often revolves around the pursuit of wealth and the conflicts it
incites. However, this depiction only scratches the surface of the
complex dynamics at play within these families. Money, although a
frequent point of contention, is not the primary driver of disputes; it often
serves as a convenient proxy or platform upon which deeper, underlying
disagreements are carried out. They, for example, raise dividends to
quiet a disgruntled shareholder’s complaints, and then find themselves
facing similar issues just a few months down the road. Regrettably, this
focus on financial conflict distracts families from recognizing and
addressing the true root causes, which are often relational in nature.
With this research report, which was commissioned by D. Randolph
Waesche, we seek to provide a deeper understanding of how business
families conceptualize money based on their experiences, values, and
objectives, and how different conceptualizations of money affect
relationships, dynamics, and decision-making within the family and the
business. Through our research, we hope to bring academic awareness
to this critical, yet under-researched topic that affects both business and
family outcomes in a variety of ways, and to provide business families
and their advisors with actionable, research-based guidance and advice,
supporting them in having meaningful discussions around the role money
plays in their families and businesses.
May this report serve as a catalyst for thought-provoking conversations
in your family!
The Authors,
Anneleen Michiels and Claudia Binz Astrachan
Foreword II
Throughout my forty-five years as a family enterprise and wealth advisor,
I have struggled to understand and communicate to my clients the role
of money and its influence on the family and family enterprise.
I spent countless hours with my good friend and colleague, Dick Wagner,
JD, CFP, attempting to understand this elusive topic. What we learned
was threefold. One is that we cannot avoid the topic of money. It
seduces and beckons like a siren’s song and consumes an inordinate
amount of our life’s energies. We also learned that we don’t know that
much about it even though it is an all-powerful, persuasive, and influential
force. Finally, we learned that there is nothing more intimate than money.
It holds our darkest secrets and our brightest lights. It illuminates our
souls. In profound manners, money shows us where our hearts lie.
Unfortunately, when Wagner passed away and I lost my partner, I also
lost my inclination to study money’s role in the family further but
ultimately not my desire to explore this relatively obscure topic. After
years of investigation to find talented and experienced academics, I was
fortunate to be introduced to Anneleen Michiels and Claudia Binz
Astrachan at a Family Firm Institute event, whom I commissioned to
conduct this research. After reading their report, you will realize that they
excel at explaining money’s inescapable influence on the family
enterprise.
This report will hopefully engage other academics to further research
this provocative subject and for practitioners to use the information when
attempting to resolve the many-faceted conflicts that have money as
their origin/root.
D. Randolph Waesche
CFP, Family Firm Institute Fellow
Race Rock, LLC
randywaesche@gmail.com
985-630-0643
2
About this
Research Report
In 1993, the Family Business Review published an article titled “Preparing the next
generation for wealth: a conversation with Howard H. Stevenson” (Astrachan, 1993).
Thirty years have passed, and as with many thought-provoking contributions, the
academic debate has not continued to explore this topic that is so tremendously
influential in practice. This remarkable gap in current academic research was also
acknowledged in an FFI Practitioner article by Waesche (2017), calling for
academic attention to money’s influence on the family enterprise. This research is
to our knowledge the first systematic research effort to empirically explore the
role of money and wealth in the family business and the business family. We
followed the multi-stage methodological approach outlined below:
1. Leaning on the concept of “money scripts”, an established concept from the
field of Financial Psychology, we discuss different ways in which family members
think about money and how that might affect money-related decisions in business
and family. This represents the conceptual foundation for this research report.
2. Between April and May of 2023, we sought the wisdom of thought leaders in the
domains of financial psychology and multigenerational family wealth management
and conducted seven interviews with experts based in Belgium, the United
Kingdom, and the United States. These interviews were transcribed and analyzed
using qualitative content analysis software. This step enhanced our comprehension
of the strategies wealthy families employ when navigating conversations about
wealth and making financial decisions that intersect with family and business
concerns. The insights from these experts helped us in developing the survey, but
also in enriching the entirety of this report. Their insights, coupled with interviews
with members of business families (maintained anonymous to preserve their
privacy), constitute the bedrock of the case studies featured in Chapter 3. The
following experts were interviewed for this project: Jay Hughes (Author of “Family
Wealth: Keeping it in the Family”), Dr. Lee Hausner (Author of ”Children of Paradise:
Successful Parenting for Prosperous Families”), Prof. Dr. Adrian Furnham (Author of
”The New Psychology of Money”), Jill Shipley (Managing Director and Head of
Governance and Education at AlTi – Tiedemann Global); Dr. Kirby Rosplock
(Founder of Tamarind Partners, Author of“The Complete Family Office Handbook”);
Prof. Dr. Marleen Dieleman (National University of Singapore and IMD); Prof. Dr.
Martin Euwema (KU Leuven and Author of “Grammar of the Wealthy Family”).
3
3. An online-based quantitative survey was deployed in three languages (i.e., English,
German, Dutch) on July 7, 2023. The survey was shared on the authors’ social media
channels, and through various academic partner networks (i.e., Witten/Herdecke
University, Hasselt University, Lucerne University of Applied Sciences and Arts,
Prairie Family Business Association, FBN Netherlands). It yielded 254 responses
from seven countries by the time the survey was closed on August 31, 2023. We
extend our gratitude to Prof. Dr. Tom Rüsen from the Witten Institute for Family
Business for his invaluable support in distributing our survey.
4. Between May and September of 2023, we conducted 12 interviews with
members of business families in Belgium, Colombia, Switzerland, the United
Kingdom, and the United States. We used this data to compile the short case
studies included in this report.
5. Based on the input from the literature review, survey, expert interviews and
business family interviews, we identified and formulated recommendations for
business-owning families and their advisors, as well as fruitful avenues for future
academic research.
The report is structured as follows: After the introduction of our conceptual
foundation (Chapter 1), we discuss the findings from our survey (Chapter 2) and
reflect on our take-aways leveraging a series of short case studies with
multigenerational business families from Belgium, Switzerland, Colombia, and the
United States (Chapter 3). We summarize our findings through a series of actionable
recommendations for business-owning families, their advisors, and for family
business researchers (Chapter 4). These recommendations include reflection as
well as discussion questions for business families to support healthy conversations
around money and wealth, and suggestions for further research.
4
1
Money in the Family
Business System
“Money is probably the most emotionally meaningful
object in contemporary life; only food and sex are its
close competitors as common carriers of such
strong and diverse feelings, significances, and
strivings.” (Krueger, 1986, p. 3)
To state the obvious: Without money, there is neither a family business nor a
business family. However – and possibly even more obvious to those who work with
and are part of a family business – money alone is not what keeps the business
afloat, and the family united across generations (Pieper, 2007). On the business side,
sufficient financial resources are needed to operate and grow the enterprise, adapt
to changing market conditions, and make sensible investments that secure the future
of the organizations for generations to come. On the family side, the financial
resources available can provide security and create opportunities and experiences –
but oftentimes, they also fuel conflict and nurture feelings of inequality.
In theory, money is but an inert medium of exchange (Orrell & Chlupaty, 2016). In
reality, however, it is a complex social phenomenon that combines affective (i.e.,
money as good or bad), symbolic (e.g., status, power, freedom), and behavioral
components (e.g., saving, spending, investing). In other words, the meanings that
individuals or groups attach to money – how they conceptualize it – affect their
attitudes, beliefs, and behavioral tendencies toward it. The Bible gives us a poignant
reminder: “For where your treasure is, there your heart will also be” (Matthew 6:19-21).
Money can motivate behaviors ranging from lavish consumption, purposeful investing,
and anxious saving, to gracious giving. What is more, money can be – and often is –
used to incentivize or punish others toward a certain goal (Mitchell & Mickel, 1999).
The way money is conceptualized in a social system significantly influences its
manifestation in relational dynamics and in decision-making processes. In the case of
the family business system, this pertains both to the family and the company. For
example, families that perceive money as a powerful instrument to incentivize
desired behaviors might choose to offer above-market salaries to encourage family
members to join the business or increase dividends to generate enthusiasm among
the next generation. Conversely, families adopting a more control-oriented approach
toward money may withhold financial resources from members who consistently
exhibit inappropriate public behavior.
5
Alternatively, those with a reward-oriented attitude may acknowledge commendable
actions by family members through monetary gifts or increased access to family
funds.
In sum, money can serve as a strategic instrument business families use to achieve
certain outcomes and to steer family members towards desirable behaviors that
align with family values and objectives.
Despite the role that money plays both for the short and long-term health of the
family business system, families quite often are largely unaware of how their
conceptualization of money, or how money shows up in their family and in their
business, informs the conversations they have, the decisions they make and over
time, how these behaviors come to affect family relationships and dynamics. This
lack of awareness is fueled by the discomfort that many families feel when it comes
to talking about money: “We don’t talk about money”, people often say. But why is
that – why do many of us feel anxious, uneasy, or embarrassed when we (are forced
to) talk about money?
Conceptualizations of Money: Money Scripts
At the heart of all our financial actions, whether beneficial or problematic, lie “money
scripts". In 2009, financial psychologists Brad and Ted Klontz coined this term to
describe an individual’s core beliefs about money that drive their behavior. They are
typically “unconscious, trans-generational beliefs [that] are developed in childhood
and drive adult financial behaviors” (Klontz & Britt, 2012, p. 33). They are passed
down through generations within families and cultures. When they are developed in
response to a painful or even traumatic event, such as severe loss (i.e., financial,
emotional, or else), they can become resistant to change, even when they are self-
destructive, and they often only contain partial truths (Klontz & Klontz, 2009).
While the numerous survey instruments used to assess individuals’ attitudes towards
money differ in terms of their terminology as well as structure, most share the
following attitudinal categories (e.g., Lay & Furnham, 2018; Roberts & Sepulveda,
1999; Yamauchi & Templer, 1982), as shown in Figure 1 below. In their book Wealth
3.0, Grubman, Jaffe, and Keffeler (2023), express an important nuance: the
conventional frameworks for understanding money attitudes and behaviors may not
transpose seamlessly onto the wealthy. This might particularly be true for those
embedded within business families. This calls for a nuanced approach to
understanding and interpreting money scripts in this context.
6
A source of anxiety, fear or
disgust
A choice of self-worth,
achievement, and success
(self-oriented)
A source of security,
protection,
independence and
stability
A source of behavioral control,
power, reward and incentive
A source of happiness, choice
and solution to all problems
A source of status, prestige
(other-oriented)
MONEY
SCRIPTS
A means to an end, pursuit of
non-financial objectives
IN THE BUSINESS FAMILY
Fig 1. Money Scripts in the Business Family (Adapted from Klontz & Klontz, 2009)
7
Building upon existing research on money scripts, which, is not initially crafted with a
focus on business families, we venture deeper to delineate how these scripts might
occur in the context of a business family. By weaving the narrative of business
families into the broader discourse on money and wealth, we aspire to foster a
deeper understanding that bridges the gap between theory and practice, thus paving
the way for more meaningful dialogues and actionable insights for business families
and their advisors.
Money as a Source of Happiness
Over the years, a great deal of research has debunked the
popular notion that money buys happiness. In fact, focusing
too heavily on financial aspirations can lead to a host of
negative outcomes (Park, Ward & Naragon-Gainly, 2017).
However, prior research also finds that money is a means to
self-actualize, which is correlated with higher levels of
emotional well-being. Money in sufficient amounts removes
resource constraints and allows individuals to engage in fun
and pleasurable activities; it also makes it easier to meet
physiological and security needs, and more likely for
individuals to avoid or mitigate negative events (Diener et al.,
1984). On the other hand, “money is often gained at the
expense of other valued things” such as spending time with
loved ones (Diener et al., 1984, p. 263) – and what is more,
people tend to adapt to whatever income they have, which
means that aspirations eventually rise higher. So, is it true that
”people with more money are happier because they are
working for higher level needs[on the Maslow hierarchy, i.e.,
love, esteem, and self-actualization]?” (Diener et al., 1984, p.
265). Prior research therefore suggests that it is likely not
money that makes people happy, but the freedom it creates
for those who have it.
When we focus on business families, this would mean that
the happiness derived from money is contingent on the
freedom individuals have to use it in ways that resonate with
them – without any restrictions or conditions attached.
Essentially, when money comes with “no strings attached”,
it can be considered a source of happiness, allowing
individuals to lead a prosperous and fulfilling life.
8
99
Money as a Source of Self-Worth
It has been observed that individuals who closely tie their self-
esteem to their financial achievements – adopting a "self-
worth as net worth" perspective – are more prone heightened
stress and financial hassles. This mindset seems to create a
paradox where individuals are less inclined to indulge in lavish
spending, yet find themselves grappling with diminished
personal freedom (Park, Ward, and Naragon-Gainey, 2017;
Hira & Mugenda, 1999; Klotz et al., 2011). Moreover, this
approach to money can trap people in a relentless cycle of
competition, constantly striving to surpass those around them
in terms of wealth accumulation (Kasser & Ahuvia, 2002).
This preoccupation with financial standing thus comes with a
toll, manifesting in lower levels of overall well-being, vitality,
and happiness (Tatzel, 2002; Kasser & Ahuvia, 2002).
Additionally, it has been linked to an increase in anxiety levels,
signs of depression, and even physical health issues (Park et
al., 2017). A notable repercussion of adopting this financial
perspective is fluctuating self-esteem, particularly noticeable
during financial downturns. These fluctuations, unfortunately,
are closely associated with higher risk aversion, putting
individuals on shaky ground of constant self-evaluation based
on financial performance (Park et al., 2017).
Turning our lens toward business families, it is apparent that
harboring such a financial viewpoint can sow seeds of
discord. Trapped in the belief that their personal value is
directly proportional to their financial success, family
members with this money script might inadvertently
jeopardize their mental and physical well-being.
Furthermore, this mindset fosters a comparison culture,
where individuals constantly measure their worth against
the earnings of their family peers, a practice that can erode
not only one's sense of self-worth but also the cherished
bonds of family relationships.
Money as a Source of Status
Analogous to the previously discussed money script, where it is seen as a
measure of self-worth, the "money as status" script draws a significant link
between financial prosperity and a heightened sense of accomplishment.
However, this perspective diverges markedly as it is not introspective (i.e. self-
oriented) but rather extends outward (i.e. other-oriented), reflecting individuals'
standings in the broader societal context. Central to this viewpoint is the
conviction that acquiring wealth serves as a gateway to prestige and elevated
status in society, projecting a powerful symbol of success and influence that
others can admire and respect (Lay & Furnham, 2018).
Within this money script, individuals are often more than willing to display their
financial assets, viewing them as badges of honor that can garner admiration and
respect from peers. Money, in this context, morphs into a powerful tool that not
only presents social capital but also has the potential to influence and shape
social dynamics.
This perception of money as a status symbol extends further, as it has also been
linked to a tendency to employ money as a means to persuade people (Lay &
Furnham, 2018) as well as heightened sensitivity towards financial loss. Drawing
upon the insights of Kahnemann and Tversky (1982) it appears that the suffering
associated with losing a significant sum of money far outweighs the joy of
acquiring an equivalent amount. Consequently, individuals who closely align their
identity or status with their financial standing tend to exhibit greater loss aversion,
fearing the potential repercussions of diminished social stature or eroded self-
esteem with fluctuating wealth levels (Engelberg & Sjöberg, 2007).
Within the context of business families, this money script manifests as a
relentless pressure to adhere to a lifestyle that symbolizes success, often
characterized by grandiose displays of wealth such as private jets, luxury
brands, and exotic vacations. This pursuit, however, can seed discord and
reputational challenges, particularly when such a lifestyle clashes with the
foundational values and principles the family aspires to embody and project.
10
Money as a Source of Anxiety
Discussing money openly tends to be a complex and sensitive issue
for a majority of individuals, as it is often linked to feelings of shame
and secrecy (Klontz & Klontz, 2009). For example, in a survey of
1,001 adults, Medintz (2004) finds that four out of ten respondents
had lied to their significant other about the cost of a purchase. An
equivalent proportion believed that sharing financial information,
even with close friends or significant others, was not needed. Some
individuals have a dichotomous relationship with money, viewing it
as “a source of anxiety as well as a source of protection from
anxiety” (Roberts & Jones, 200, p. 219). This money script
encompasses various anxieties surrounding money, ranging from a
reluctance to incur debt to perceiving money as an entity that is
fundamentally unnecessary, evil, or coercive (Gasiorowska, 2014).
In the privileged echelons of society, especially among the
successors in family businesses, there exists a pronounced
dilemma regarding wealth inheritance amidst tremendous social
inequality. In our interactions with next-generation family members,
we encounter recurring narratives of individuals grappling with the
moral and social implications of inheriting substantial wealth. Many
have fears of alienating friends or even spouses by revealing the
extent of their family's affluence. This wealth, instead of being seen
as a privilege, often morphs into a burdensome secret that fosters
isolation and engenders a negative disposition towards money.
Furthermore, this wealth inheritance phenomenon sometimes
nurtures a sense of unease and inadequacy among family members
who perceive themselves as not having significantly contributed to
the family’s wealth. It can even lead to severe mental health issues.
This sentiment can be further exacerbated when the methods of
wealth accumulation clash with their personal values and ethical
compasses.
Within the dynamics of business families, these various
orientations towards money can have profound implications.
Depending on the underlying factors fueling this multifaceted
money script, family members might start feeling uncomfortable
and disconnected from other family members. This uneasiness
can sometimes be about moral questions linked to their wealth,
and can go even further in the form of mental health issues. As
time goes on, these feelings can grow to the point where some
family members decide it might be better to step back from the
family, seeking peace and sticking to their personal beliefs, even if
it means giving up their ties to the family and the wealth that
comes with it.
11
Money as a Source of Security
Perceived financial insecurity can often serve as a potent catalyst
for anxiety and fear, even in families that are seemingly well-off. At
times, these fears may seem paradoxical, with individuals having
deep-rooted worries about financial ruin despite possessing
substantial wealth and enjoying a comfortable lifestyle through the
dividends of a thriving family business.
Take, for instance, a recent interaction we had with a prosperous
family, where the worry of financial instability haunted several of its
members. Despite holding significant shares in a flourishing family
enterprise, they were struggling with fears of potential poverty and
homelessness. This fear was exacerbated by a perceived loss of
control, where the individuals felt that their financial fate was firmly
gripped by the family member at the helm of the business. Over
time, these feelings of vulnerability had escalated, fostering
unhealthy narratives surrounding wealth and security. The fear of
loss entwined with a perceived lack of control created a toxic
environment, where anxieties grew wildly disproportionate to the
reality of their financial situation.
Moreover, the roots of such financial anxieties can sometimes be
traced back to historical events that have left a permanent mark on
the family's collective psyche. Some families have endured
traumatic episodes, both within the family sphere and in the
business - where they lost, and then rebuilt, everything from
scratch. These past experiences can cultivate a heightened
sensitivity towards financial stability, fostering a shared belief that
maintaining a robust financial foundation is indispensable in
safeguarding against unforeseen disruptions.
In the business family context, individuals with this money
mindset might translate to a conservative approach towards
finance. They might demonstrate a preference for saving, opting
to retain a larger portion of the profits within the business,
consequently distributing lower payouts to the family members.
This cautious stance may further extend to a reluctance to
venture into risky investments, favoring a trajectory of steady,
albeit slower, growth for the business. This conservative financial
orientation then serves as a protective mechanism, a learned
response from past traumas, ensuring that the family can
withstand potential disruptions and safeguard the family's legacy
for generations to come.
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Money as a Source of Behavioral Control
As noted by Atwood in 2012, “Money is used to control children, punish
estranged spouses, measure a person’s true feelings, buy freedom from
relationships, or stop a partner from leaving”. It can be used as a short-term
reward or a long-term incentive (Furnham & Argyle, 1998), but equally as a
mechanism to control, exert power, or punish. Many families resort to
financial incentives as a means to encourage adherence to the family's
values and objectives, e.g., rewarding children for maintaining a drug-free
lifestyle, offering monetary acknowledgments for academic achievements,
scored goals, or matches won. In the business, this money script extends
to providing remuneration that surpasses market standards for family
employees, distributing dividends that support otherwise unsustainable
lifestyles, or allocating funds to fuel family-initiated startup ventures.
The underlying rationale for these financial rewards is to cultivate behaviors
that resonate with the family's collective goals. There is a considerable
amount of scholarly work in the context of the workplace that shows a
broad consensus that “psychological research has consistently suggested
that where money has motivational power, it is nearly always negative”
(Furnham, 2014, p 211). The reason is that rewards – essentially a bonus
contingent on certain behaviors – are seen as ‘manipulative’ and ‘punitive’:
“If I fail to show desired behaviors, I am punished.”. These financial
incentives can inadvertently introduce competition, discourage risk-taking,
substitute for genuine support mechanisms such as feedback or autonomy,
and erode the intrinsic motivations that drive individuals. Furthermore, the
introduction of monetary incentives can sometimes amplify individualistic
tendencies, thereby diminishing the spirit of communal harmony and
collaboration (Chib et al., 2012; Vohs et al., 2006).
Within the business family context, money can serve as a compass
guiding family members towards paths deemed favorable by the majority.
However, these financial incentives, transitory in their nature, tend to
backfire, giving rise to outcomes contrary to the intended objectives.
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Money as a Means to an End
At its core, the commodity theory of money delineates that money
primarily serves three functions in society: it acts as a medium of
exchange, a unit of account, and a store of value, essentially facilitating
trade and transactions within a community. This theory portrays money
as a tool, a vehicle that enables individuals and groups to attain specific
goals and objectives – a “means to an end”. We use money to as a
resource to achieve a certain outcome. For some business family
members, particularly those that have expanded to a considerable size
where the income from business ownership no longer significantly
impacts their overall wealth, a shift in perspective occurs. The business
transitions from being merely a source of financial gains to a powerful
instrument that can be leveraged to realize both financial and non-
financial aspirations, including philanthropic endeavors. For them, the
business transforms into a vehicle where family members can come
together to create a lasting family legacy that includes not only making
money but also a dedication to social responsibility and community
development.
This change in perspective can act as a potent unifying force within
the business family, aligning members across different generations
and branches towards a common goal that extends beyond mere
financial gains. It fosters a shared vision that binds the family with a
sense of purpose, a collective mission that transcends the individual
and embraces the broader community. However, this perspective may
not be uniformly shared among all family members. While some
individuals view money as a means to an end, a source to do good,
other family members might not share this sentiment. This divergence
in money scripts can sow seeds of discord within the family over
possible philanthropic endeavors.
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Money Scripts | Key Take-Aways
Money scripts are unconscious and stable beliefs about money that shape
our attitude towards spending, accumulating, thinking, or talking about, and
that affect the decisions we make related to money – and such decisions
abound in the family business and the business family. Some of these
decisions may seem relatively straightforward, such as making an
investment decision based on the rate of return that the family shareholders
have agreed on previously. Others can be trickier, for example, setting
compensation for family members working in the business or those serving
on the board or the family council. Here, families may decide to
compensate family associates above market level or below (both are very
common strategies), or to compensate family members equally, regardless
of qualification or role (which happens more often than you think!). Where it
can get even more challenging is when it comes to lending money to family
members, maybe for an entrepreneurial initiative, for educational purposes,
or for a private yacht – where should the family draw the line, and why?
What family members conceive as (in)acceptable entirely depends on the
individual and collective money scripts. Some families believe that
compensation for family members below market is signaling to non-family
employees just how committed the family is to the business. Others believe
that family members should be paid based on their financial need, even if
that leads to above-market compensation. Some families believe in
meritocracy when it comes to compensating family members; others
believe that equal pay is the key to lasting family harmony. Whatever the
beliefs underlying the compensation philosophy, they are rooted in the
agreed-upon money script.
In that sense, “self-worth” and “status” money scripts may lean towards
above-market, and “security” scripts towards below-market compensation
levels. “Behavioral control” money scripts will likely follow a performance-
based logic (with performance indicators that closely align with a desired
outcome), and “means to an end” orientations might stick to a meritocratic
approach. Money-related decisions are thus not driven by what is best for
the business but rather by what aligns with our dominant money script,
and which least disrupts the peace and the established decision-making
pattern in the family.
15
Unless we unearth the money scripts of our family members (for that
matter, we may also not be fully aware of – or accepting of – our own!) and
identify the underlying drivers keeping those scripts alive, we cannot
objectively assess our money decisions. Clarity and transparency around
what drives individual and collective preferences when it comes to money
and wealth is helpful in understanding how these preferences manifest in
the family and in the business. Given that these preferences are reflected in
how family members think about the business and the family and in the
decisions that they make, more awareness would greatly help in preventing
and mitigating family conflict that seemingly revolves around money.
What is more, families might benefit from paying attention to how they use
financial incentives with family members to motivate certain behaviors.
These are well-intended mechanisms that we so often observe in practice,
but the substantial body of research on financial incentives clearly highlights
how counter-productive they are. Many families of wealth – willingly or by
accident – cultivate a next generation of helpless heirs who depend on an
entire family office staff not only to manage their assets but also to book
plane tickets, manage housekeepers, or pay bills. The older generation,
after two decades of financially coddling their children and removing every
obstacle along the way, then complains about the younger generation not
having any ‘entrepreneurial bite’. These children are often left feeling
powerless, and without any agency.
We see the opposite as well, with wealthy parents who are so concerned
with raising entitled children that they invalidate any difficulties their children
encounter, constantly pointing to their privilege. In those cases, money is
used not to incentivize but to threaten: Because these children are raised in
privilege, they have no reason to not (out)perform. The pressure, to many, is
almost unbearable.
The family business is a vehicle where family members (too) often feel
primarily connected through money. Money, however, is never – or hardly
ever – ‘just’ money. Given the emotional power money holds over the
family relationship, having clarity around what we associate with money in
the context of our family relationship is key to being able to make sound
decisions that benefit both the business and the family.
16
2
Findings from the Survey
Survey Data Collection and Sample Characteristics
We conducted a quantitative survey among business family members in July and
August of 2023. The online-based quantitative survey was deployed in English,
German, and Dutch, and it was shared on the authors’ social media pages and
through various academic and practitioner partner networks (i.e., Witten/Herdecke
University, Hasselt University, Lucerne University of Applied Sciences and Arts, FBN
Netherlands). The survey yielded 354 responses from seven countries.
After eliminating incomplete responses, we ended up with a total sample of 354
valid responses. We analyzed the data using two statistical software programs,
namely SPSS (version 29) and SmartPLS (version 4.0). We analyzed the qualitative
data from the open-text responses using the qualitative content analysis software
NVivo (version 12).
Our sample of 354 business family members is diversified in terms of the size of
the ownership group, ownership distribution, and participant age on the family side,
and firm age and firm size on the organizational side.
17
The survey encompasses a diverse group of business family members,
with a variety of age groups and roles within their families. All
respondents are members of business-owning families. To assess
whether money scripts differed depe nding on individual and family-level
characteristics, we asked respondents to share information about
themselves as well as the family ownership group.
Demographics: Most survey respondents (37%) are in the age bracket
of 50 to 64 years, and slightly less (31%) are in the 30 to 49-year age
bracket. A small percentage of participants is younger than 30 years (19
to 29 years, 8%), and over 65 years old (24%). Twenty-eight percent of
survey participants are women, and 72% are male.
Number of Children: Most respondents (38%) report having two
children, followed by a smaller group (26%) that has three children.
Fifteen percent have one child, 2% have four children, and a small
minority of 4% have five or more children. (15%) that does not have any
children at this point.
Size of Ownership Group: Most respondents are part of smaller
shareholder groups of two to 10 members (62%). About the same
number of respondents indicated that they are the sole owner (15%) or
part of a larger shareholder group of 11 to 50 members (16%). A small
minority of respondents belongs to shareholders groups of 51 or more
members (7%).
Ownership Role: Most respondents (54%) hold a senior leadership role,
followed by smaller groups that serves on the board of directors (17%)
and on a family governance (13%) body (e.g., family council). A small
minority of 5% have non-managerial roles in the family business, and
slightly more respondents (12%) hold no formal roles in either the
business or the family.
Generational Ownership: Most respondents (28%) are in the third
generation of ownership, followed by 22% in the second generation,
12% in the fourth generation, and 14% in the fifth generation. Fourteen
percent of respondents are in the sixth generation of ownership and
beyond.
Family and Ownership
18
The survey encompasses a diverse group of businesses from around the
world. To assess whether money scripts differed depending on firm
characteristics, we asked participants to share characteristics (mainly)
related to size and age with us.
Firm age: The average (median) founding year of the firms in our sample is
1902 (1932).
Location: Eighty-one percent of our respondents state that their
headquarters are located in Germany, 12% are headquartered in the
Netherlands or Belgium, 5% in the United States and Canada, and the
remaining 2% in Argentina, Colombia, Singapore, Belarus, Latvia, and
Poland.
Employee base: Seventeen percent of the firms in our sample have less
than 50 employees, 24% have between 50 and 249 employees, 23%
have between 250 and 999 employees, and 40% have more than 1,000
employees.
Annual revenue: In terms of revenue distribution, 14% has less than 25m
Euro revenue per year, 10% earn between 25 and 50m Euro, 11% between
51 and 100m Euro, 18% between 101 and 250m Euro, 14% between 251
and 500m Euro, 13% between 501 and 1bn Euro, and 21% earn more than
1bn in revenue per year.
Family office: 32% of our respondents have a family office, or some other
shared structure of managing the family wealth, as opposed to 68% who
have not.
Organizational Characteristics
19
Money Scripts
Most respondents (88%) in our survey associate money most strongly with
“Security”, followed by “Doing good, a Means to an End” (63%) and “Freedom
and Autonomy” (51%). A small minority (9%) associate money with “Love” and
even less respondents associate money with “Anxiety, Fear or Disgust” (5%) (see
Figure 3 below).
It is interesting to tie these money scripts to another finding in the survey, where
almost half of the respondents (48%) indicate that their family prefers to avoid
bank debt at any rate (i.e., adhering to a zero-leverage policy), possibly reflecting
prevalent attitudes towards money within the family context. This finding aligns
with the ongoing academic debate on the ‘zero leverage puzzle’ – and more
specifically the tendency of family firms to eschew borrowing more frequently
than non-family firms. Given that the majority in our sample associate money with
‘security’ or ‘freedom or autonomy’, their preference for a debt-free approach
seems to be less mysterious.
Selected Findings
20
Fig 2. Money Scripts
Family Employee Compensation Schemes
Family compensation is one of the more challenging topics in the context of the role that
money and wealth play in the business and the family. Depending on their basic
orientation around money, some families pay all of their family employees the same,
regardless of their qualifications and current roles in the business. This, to them, signals
equality and fairness: We are all family members, we are all in this together. In reality, it is
pure conflict avoidance: equal is not the same as fair, even though that is something that
many families strongly believe in and live by. The family shies away from having a
conversation around meritocracy, which would require them to acknowledge, and have a
discussion about the fact that different family members have different abilities to
contribute to the family and the business. These families are worried that this pay
discussion might fuel ‘hard feelings and discontentment’ and thus would lead to conflict.
So paying everyone the same allows the family to keep a lid on it. What it does, however,
is lead the most talented family members to leave the family business to build a career
somewhere else.
Other families pay their family employees above or below market; both of these choices
have a clear signaling effect. Paying above can signal to the family and the workforce
that family employees are more valuable than non-family associates, that they need to
be motivated financially to join the business, or that they have special privileges
(sometimes, family employees are paid above market to meet their financial needs). It
might also cause family members to feel guilty because the individual’s outcome/input
ratio is greater than the corresponding ratio of another person (usually a non-family
member) with whom that individual compares herself (Furnham, 2014).
Paying below market can signal to the family members that they should be grateful to
work in the family business, or that it is their responsibility to contribute to the family
legacy by working there. Underpayment inequity might cause family members to feel
angry because their individual’s outcome/input ratio is less than the corresponding ratio
of another person (usually a non-family member) when that individual compares herself
(Furnham, 2014).
Either way, over- or under-paying sends a signal, and it is usually tied to some sort of
orientation, a set of beliefs, or money scripts. A family that feels guilty for the wealth they
accumulated may lean towards underpaying their family employees, whereas a family
with a status and prestige money script likely leans towards overpaying.
In our survey, we find that 14% pay all family members equally regardless of position; 16%
compensate family members above market rate; and 18% compensate family members
below market rate.
21
14%
EQUAL COMPENS A T I O N
16%
ABOVE MARKET R A T E
18%
BELOW MARKET R A T E
Wealth is a Private Topic
A notable 45% of respondents report that their friends are unaware of their family's
financial status. Intriguingly, this trend of financial confidentiality is more pronounced
among females, with a statistically significant mean difference (females at 3.56 vs. males
at 3.19). Additionally, a smaller yet significant 13% indicate that their partner does not
know how wealthy their family is, highlighting a profound level of personal privacy or
potential financial disparity that influences their choice to disclose such information.
A significant majority of 65% perceive the distribution of money within their families as
equitable, with an average rating of 3.75 out of a possible 5. Similarly, 64% of participants
feel that their family's financial dealings are transparent, scoring closely at 3.76.
Contrastingly, the dialogue on financial matters seems to be less frequent, with 46% of
respondents revealing that topics such as compensation, gifts, and dividends are not
regularly discussed within their family (average rating 2.84 out of 5). This could point
towards an avoidance of potential conflicts that such discussions may incite.
Moreover, there is a notable discomfort in discussing monetary issues, with 27% of the
survey participants feeling uneasy about engaging in money-related conversations. This
discomfort may stem from taboos surrounding money, personal insecurities, or the fear
of judgment and could have implications for transparency within family units.
22
Money Conflicts
A relatively small percentage, 11%, have experienced disputes over financial distributions
from their family business. Furthermore, 13% of the participants have had disagreements
regarding compensation for family members working in the business.
21% of the respondents acknowledge arguments about money that are actually proxies
for deeper issues, which reflects the complex emotional underpinnings that financial
discussions can often surface. Almost half of the respondents, 45%, report that their
families lack formal mechanisms to handle financial disagreements. This could
potentially lead to unresolved tensions and may adversely affect both family relations
and business operations.
Smaller percentages of respondents cite conflicts over specific financial aspects of their
business: 8% fight or have fought the level of dividend payments, another 8% over
philanthropic endeavors, and 9% over the degree of debt in the business.
Money as an Instrument
The data indicates that 42% of respondents believe money is occasionally used by their
families as a tool for incentivization - financial resources are used to encourage certain
behaviors or achievements among family members. Meanwhile, a smaller 10% of
respondents feel that their families sometimes use money as a means of exerting
control. In these instances, money is a lever for influencing decisions and maintaining
power dynamics within the family. Furthermore, 7%, perceive that money is used
manipulatively by their families. Thus, while money is commonly used as an incentive
within families, its role can extend to more contentious uses, such as control and
manipulation, although these are less commonly perceived among the respondents.
Level of Financial Understanding
According to the findings, 34% of respondents feel that they were not educated early
enough by their parents about money and wealth, reflecting a gap in early financial
education. The respondents rate their own financial knowledge, on average, as 7 out of
10, which suggests a relatively high self-assessed level of financial understanding.
However, there remains a small portion, 8%, who admit having lack of understanding
when it comes to financial talk and jargon. 82% of respondents say they have a clear
understanding of their personal wealth, knowing exactly how much money they have and
where it is located, which points to a high level of financial awareness within this group.
Conversely, 22% express a desire to have a better grasp of financial affairs than they
currently do, signaling an awareness of their limitations and a potential interest in further
financial education. This aspect underscores a recognition among a significant minority of
the importance of financial acumen and the desire to improve it.
Level of Family Unity
Lastly, we asked our participants to rate their family group regarding their level of
cohesion and alignment, and their ability to communicate and resolve conflict. Most room
for improvement can be found in the areas of communication and conflict management –
this is in line with a multitude of empirical studies that show that most groups fall short in
terms of their ability to communicate effectively and to productively deal with conflict.
Our findings show that 61% of individuals feel that they are part of a cohesive family unit,
while 21% feel they are not. In terms of communication, 25% feel they do not
communicate well as a family. Regarding dealing with conflict, 27% acknowledge they do
not handle such situations well. When it comes to aligning around objectives, 20% feel
that they are not on the same page. Similarly, 18% of families believe they do not have a
strong shared purpose.
Focusing on perceptions of wealth, 53% of those surveyed consider their family to be
wealthy, and only 6% indicate they experience guilt over their financial status. The
majority, 66%, view their family's wealth as a blessing, a perspective that does not
significantly differ across age, gender, or family size. In contrast, 10% feel that their
family's wealth is a burden, and again, this view is not significantly different for various
ages, genders or family sizes.
82% of respondents claim to have a healthy relationship with money, scoring a high 4.21
out of 5. However, 34% of the individuals find themselves often contemplating the role
and meaning of money in their lives. In terms of financial dependence, 38% rely on the
income from their family business.
23
Key Take-Aways of the Survey
Likely the most important finding from the survey – albeit possibly not
entirely surprising – is that the quantitative methodology we applied to
explore this particular topic fell short. Over the past years, the authors have
had dozens of conversations where members of multigenerational families
would talk about the burden of wealth at length – the shame and pressure
that comes with being raised with the privilege of immense wealth. They
would recount numerous incidences where their families used money as an
instrument, be it to incentivize, punish, or control family members as well as
individuals outside the family. This anecdotal evidence was not reflected in
our quantitative data (however, once again, our interview partners openly
shared many stories that exemplified their oftentimes challenging
relationship with money and wealth).
Despite this somewhat disappointing lack of quantitative support for our
anecdotally based assumptions, the survey still brought to light a few
important things:
There is a lack of systematic education and open conversation around
money and wealth in business families. As a consequence, family members
do not know each other’s money scripts and may resort to judging each
other for different orientations towards money.
Conflicts can be conveniently masked as money conflicts when in fact
they may be centered around an underlying (likely emotional) issue. Unless
the underlying issue is surfaced, addressing the superficial money issue is
typically short-lived.
Money is not something we like to talk about – which may lead us to feel
distanced from our friends and spouses.
Almost every other family business pays family members in the business
below or above market value or pays all family members the same
regardless of role or qualifications. This is often a strategy to avoid difficult
conversations, which will end up driving away the best family talent.
Most business families conceptualize money and wealth as a source of
security and freedom – which may affect their inclination towards
investment risk or external debt.
01
02
03
04
05
24
3
Reality-Based Learning
Cases
The learning cases presented in this chapter are based on confidential conversations with
members of multigenerational business families. All three cases are fully anonymized but
based on and truthful to factual events and circumstances. At the end of each case, we
present a range of reflection questions to discuss with your family group or a trusted
advisor.
Case 1: Transparency and Education about Money
and Wealth
Peeters: Silent Wealth and Its Tragic Consequences
Artur Peeters took over the helm of Peeters Holding and the Peeters Brewery from his
uncle in 1986, subsequently expanding its operations internationally, propelling the family
into the ranks of Belgium's wealthiest families. Artur’s childless uncle had left the business
and the lion's share of his wealth to him, with the explicit wish to keep the business in the
family. Artur – a divorcee of 15 years – had two children of his own, and therefore never
saw this an issue. To him, his older son Laurens was a natural born leader, outgoing,
charismatic, and liked by all. What Artur was not aware of, was that Laurens was dealing
with serious mental health and addiction issues. When Laurens turned 31, he took his own
life following a tragic breakup with his fiancée. Artur subsequently learned that Laurens had
accumulated half a million Euro in gambling debt, and that he had gotten involved with a
few loan sharks who had threatened him and his former fiancée for money that he owed,
which led to a devastating fight between Laurens and his fiancée on the evening of his
suicide.
The devastating loss of Laurens profoundly impacted Artur. He felt resentful towards
himself for pursuing a life of wealth and luxury, and for trivializing his son’s struggles –
whenever Laurens had voiced his struggles, Artur told him to be grateful for his
comfortable and privileged life. He did not understand why Laurens was struggling to find a
passion and a purpose – something that was so innate to Artur.
25
Following Laurens’ death, in the many conversations with his younger son, Xavier, Artur
realized that as a family they had never discussed the impact that inheriting his uncle’s
business and his wealth had on them. Artur learnt how much Laurens felt pressured into
stepping into his father’s shoes, being the oldest child – and he could never bring himself
to tell his father, who had openly shared his desire for Laurens to take over some day, that
he wished to pursue an entirely different career as an academic and writer. The loss of
Laurens compelled Artur to reevaluate his unspoken expectations regarding his children's
career choices. Artur knew that his younger son Xavier had always dreamed of becoming a
pilot – an aspiration that his father had always vigorously dismissed. Now, in the wake of
Laurens’ death, Artur realized the weight of his actions when Xavier expressed that all the
pressure would now fall on his shoulders to succeed his father. Eventually, Xavier decided
to pursue his dream of becoming a pilot, leaving the family business behind.
As a result of these experiences, Artur sold Peeters Brewery to a Dutch holding company,
breaking the family's 248-year ownership tradition. Today, he is a vocal proponent of
empowering the next generation to follow their aspirations – his mission to empower
young individuals to discover their life's purpose stands as a tribute to his late son,
Laurens. Artur also spent much time reflecting on his own personal journey with wealth. He
admitted to himself that he was primarily driven by wanting to accumulate money: The
pursuit of more became paramount, leading him to engage in risky financial ventures and
prioritize material gain over everything else. It was only after the loss of his son that Artur
realized the futility of this mindset – instead of being present as a parent, he was driven by
creating wealth. He also realized that he had failed to educate his two sons about the
responsibilities that come with having access to great wealth: it is much like raising small
children in a house with access to a lake, and not teaching them how to swim.
What can we learn from this case?
Wealth can be a blessing, but also a burden, if parents fail to guide their
children in developing a sense of responsible ownership over the family’s
assets. Neglecting open discussions about money and its impact invites
unresolved feelings of anxiety, shame, and can create distance and isolation.
Reflection questions:
In our family, both within and across generations, how openly can we talk
about money and wealth, what we appreciate about it, but also what we
may struggle with?
In our family, do we sometimes invalidate the feelings of others as they
relate to money, or do we minimize family members’ struggles in the light
of their financial privilege?
How do we educate our family members about money and wealth, about
the privileges that come with wealth, but also the responsibilities? Do we
teach our family members how to responsible budget and do we hold
them accountable for how they handle their finances?
26
Case 2: Money as a Means of Doing Good and
Conflicting Money Scripts
There are many prominent examples of companies that are dedicated to a purpose beyond
generating profits for its owners: The Elsener family for example, stewards of Victorinox, the
famous Swiss Army knife has never received a dime from the business (unless, of course,
they work there). The family – who happens to be a family of faith – long ago decided that
profits were to be fully reinvested in the company, or used to build affordable, eco-
sustainable housing for employees. To that end, the family forfeited their ownership by
donating their shares to a foundation in the late 1990’s. The foundation’s primary purpose is
to generate employment for the remote rural area in Switzerland where the company’s
headquartered are still located in the 139th year of its existence. Another, more recent and
very popular example is Patagonia, where the Chouinard family, transferred 100% of the
voting shares, representing a total of 2% of the company to a trust, and the remaining 98%
of the company (in non-voting stock) to the Holdfast Collective, a non-profit organization
dedicated to environmental protection. It appears that both ownership groups view the
companies as vehicles to do good – not for themselves, but for the community of
employees and stakeholders connected to them. However – such ownership alignment is
not always the case, as the Mueller case (below) exemplifies.
Mueller: When Wealth is (Not Just) a Means to an End
Sabina Mueller, the eight-generation leader of Mueller AG, a family-owned manufacturing
business in Switzerland had successfully grown it to a billion-Euro global conglomerate
through a serious of smart and successful acquisitions since she took over from her father
22 years ago. During that time, the shareholder group had grown to a sizeable group of over
300 individuals – and with such a dramatic increase in size came a diversification of values,
needs, and objectives. Mueller AG had always been conversative when it came to
distributions – since the founding generations, all leaders and owners shared the belief that
earnings should either benefit the employees, or go back into the business, or be shared
with the many communities in which the company operates. The family benefitted from the
company in terms of funding for education – something that had been important for the
founder – and attractive investment opportunities through a multi-family office they had
access to. Every other year, the company paid for people’s accommodation at (but not
transportation to) an annual family shareholder gathering, organized by the family council.
Recently, and following a family decision to allow spouses into family governance role, the
tone had shifted from ‘the family is here to support the company’ to ‘the company benefits
from private ownership, so what can the company do for us?’. Some family members (call
them the altruists) continued to believe that the company was successful exactly because
the family did not derive any benefits from it – the family was to steward the company and
family legacy, not benefit from it. Others (the ‘opportunists’) believed it was time to shift
towards a more shareholder-oriented approach in managing and overseeing the family
business – they wanted to treat their ownership stake just like any investment, with what
they deemed reasonable return expectations. Both groups judged each other: The
opportunists thought the altruists were naïve and lacked business acumen, and the altruists
felt that the opportunists were selfish and recklessly endangering the health of the family
business, and the community of stakeholders depending on the company.
27
The annual Shareholder Meeting was coming up, and Sabina was at an impasse: The board
of directors, which consisted of family and non-family directors, had addressed the
growing tensions in the shareholder group, and had encouraged the family to reassess
their financial and non-financial objectives. Sabina understood that if the family decided to
reverse their payout model, their entire business model and capital structure would have
to be reviewed and adjusted – this would have tremendous impact on their employee base
and on their community relationships. She reached out to the family council, and then
contacted the largest shareholders in the family group to get their opinion on the issue:
She was relieved to learn that the largest shareholders, who held close to 70% of all
company shares were strongly committed to pursuing the prior path of not distributing
earnings to shareholders. Together with the family council, she then hired a consultant to
deploy a survey to assess overall unity and commitment within the shareholder group, and
to better understand the pain points of the individual shareholders. They survey showed
that family members had become disenfranchised from the family business they heard
about once a year – many had never visited a company facility – and disengaged from a
family that was spread out all over the globe, with few to no touchpoints.
Sabine realized that while she had the votes to continue the way they had always
operated, the increasingly diverse and complex family needed more to stay together: If the
needs of those who pushed for change were ignored, the family as a whole would suffer.
Together with the family council, they decided to dedicate a portion of the earnings to
family development, which included family cohesion and education activities. The purpose
of these activities was to reconnect the family with the business and with one another, and
to nurture a sense of pride and commitment in the family legacy. They also decided to pay
for family members’ travel costs to the family shareholder meeting, which from now on
would be annual instead of every other year.
What can we learn from this case?
Families that view money as a means to an end have a compelling and
widely shared vision that excites and unites family members across
branches and generations. In the case of the Elsener family, that vision is
providing employment for, and giving back to their rural community. The
Mueller family used to have such a unifying orientation, but in the absence
of being nurtured it waned over generations. Family members began to drift
apart from each other and the business, and as such no longer felt as
responsible stewards of the family legacy. A unifying and purpose-driven
orientation requires the family to engage early on in a conversation around
‘what is the business to the family, and what is the family to the business’ to
clarify and bring to light mutual expectations and needs.
Reflection questions:
Do we have a unifying purpose for our family that goes beyond
generating wealth?
What do we do to systematically nurture this purpose across
generations and branches?
How do we deal with oppositional voices in our family (acknowledge,
silence, welcome)?
28
Case 3: Money as a Proxy Battlefield
The Williams Family
In the Williams family, wealth has always been more than just a symbol of affluence – it is a
tool for control and influence. The large conglomerate the family owns spans various
sectors, from real estate to retail, and is equally owned by the four siblings in the second
generation. The company is led by the oldest sister, Theresa; her three younger siblings –
Mark, Denise, and David – serve on the company’s board of directors alongside two
independent outsiders. Following their parents’ passing and born out of a need to move
beyond their father’s unilateral decision-making approach, the siblings decided to put in
place a family council. The intention was to discuss matters at the intersection between the
family and the business in the family to keep these issues out of the boardroom.
Three council meetings in, Theresa and Mark got into a heated argument over the basic
qualification requirements of family members working in the business. Mark was concerned
that based on these requirements none of his children would ever be able to join the
business. He felt that Theresa was pushing for these requirements on purpose – they
benefitted her children disproportionally, based on their prior work experience and
education, but did not align with the strengths and qualities of his children. Theresa called
Mark the next day, and both apologized to each other, and agreed to postpone this
discussion until the next family council meeting.
Two weeks after the conflictual family council meeting, the siblings met again in the
boardroom. The meeting went smoothly, until the topic of CEO compensation came up.
Mark suggested to review the CEO assessment process as well as Theresa’s
compensation package – he said he had done some research and he felt that Theresa
might be overcompensated, compared to industry standards. Theresa was speechless –
her compensation was set by the compensation committee, which was led by one of the
independent directors, and they followed a standard, best practice process, even utilizing a
third-party consultant, to evaluate her performance annually. Theresa could not shake the
feeling that Mark’s actions were payback for their family council discussion gone awry a
couple of weeks ago. She needed to address this with him.
When she got home in the evening, her oldest son was waiting for her in the kitchen – visibly
upset. He had received a call from his cousin – Mark’s oldest daughter, whom he was very
close with – who had told him that his mother, Theresa, obviously did not want her to work in
the company, and that she was not joining them for their Thanksgiving celebration. Theresa
realized it was time to sit the family down for a candid conversation – and that they needed
an external facilitator to set healthy boundaries and support them in keeping their emotions
in check.
29
30
What can we learn from this case?
When it comes to conflicts that center around money, always consider the
possibility that family members might be fighting about something else
instead – an underlying issue that they do not feel comfortable addressing
openly. The Williams case illustrates the role of money as a proxy
battleground – instead of finding a solution for the underlying issue (the
‘unfair’ employment policy), family members rely on money (which could also
be another financial incentive) to reprimand or punish each other.
Reflection questions:
When do we, as a family, rely on financial incentives to reward or
motivate certain behaviors? When do we withhold financial benefits to
reprimand and/or punish?
What do we fight about that may not be about money, but an underlying
issue instead (think family member compensation, payouts, family loans,
use of family assets)?
Do we run a risk of passing our generational conflicts on to the next
generation(s)?
4
Take-Aways
31
For multigenerational business families, money can be a source of unity and
purpose as much as a source of conflict. In this last section, we provide
recommendations for action and pointers for productive conversations in your
family, to demystify and normalize the role that money plays for individual family
members and the whole family. In summary, our recommendations center around
the following challenges:
1. We must understand our own as well as others’ conceptualization of money and
wealth (money scripts), and how this understanding shows up in money-related
decisions we make in the family and the business.
2. We benefit from understanding that when we have a conflict that revolves around
money, we may benefit from taking a step back to make sure that we are, in fact,
fighting about what we say we are fighting about, and not some underlying (typically)
emotional issue, making money a convenient (but ineffective) proxy battleground.
3. Educating family members about the rights and responsibilities that come with
wealth is essential. Empowering family members through knowledge to render them
capable of taking care of their own financial affairs is not a choice, but a
responsibility if we expect these family members to be competent and responsible
stewards of their own, and their family’s wealth.
4. Lastly, many families – consciously or unconsciously – use money and wealth to a
certain end; they financially incentivize and reward desired behaviors, and they use
money to punish behaviors deemed inappropriate. Money manipulation, however
common it may be, typically backfires – so paying close attention to how money is
used in our family (and correcting course!) can greatly benefit family well-being and
longevity.
32
Understanding individual family members’ financial philosophies or “money scripts”
shaping their financial perceptions and actions is crucial. These scripts often passed
down through generations, drive the dynamics of family interactions and affect
business decisions. It is therefore essential to gain a clear understanding of the
individual money scripts present within the family: if we do not understand people’s
orientations towards money, we may judge them for their financial decisions and
preferences, thereby eroding trust and harming our relationships.
Step 1. Individual Money Scripts
The first step is to identify and understand the different money scripts individual
family members hold. Our esteemed colleague, Pramodita Sharma, suggested
‘Money Autobiographies’ as a helpful tool for this task. Money autobiographies
allow participants to explore the role and influence of money and material
possessions in their lives, and to reflect on their priorities and goals. By answering
questions such as “What is your happiest memory in connection with money from
your childhood”, “Are you generous or stingy with your money”, “Do you feel guilty
about the money you have”, or “Have you made a will and if not, why not”,
participants enter a conversation with themselves about money's role in their lives,
and their interactions with others.
Step 2. Similarities, Differences, and Family Patterns
Once individuals understand their personal orientation towards money and wealth,
they can share these beliefs, experiences, and expectations surrounding money
with other family members, to identify similarities and differences. This could involve
for example mapping out the various perspectives on a ‘Money Genogram’ a tool
that visually represents the financial philosophies and their evolution over
generations. A money genogram helps assess the meaning and function of money
and family patterns dealing with money, facilitating discussion of this issue
(Mumford & Weeks, 2003). This includes looking into patterns of spending, saving,
and investing and how these patterns align or conflict with the identified money
scripts that occur within the family. It may reveal underlying tensions or synergies
that can influence the family’s financial decisions.
Money Script Clarity
Step 3. Business Family Wealth Continuum
Lastly, the family collectively agrees on the family’s position on what is called the
‘Business Family Wealth Continuum’. This spectrum ranges from one end where the
business primarily serves to fund and support the family’s lifestyle, to the other end
where the family acts as stewards of the wealth, expecting no financial benefits
from their ownership, focusing instead on business sustainability and growth.
This process involves a series of (ideally non-judgmental and empathic)
conversations around how this position might manifest in a variety of issues, such as
risk affinity, debt ceiling, dividends, compensation of family associates, or loans to
family members:
How are family members working in the business or serving on the board
compensated: Below or above market, same salary regardless of role, same as
independent directors – and what is our underlying philosophy and reasoning?
What may be the consequences of our choices in terms of attracting and
retaining family and non-family talent?
What is our dividend policy in terms of payout vs. retaining cash, under what
circumstances do we withhold dividends, how frequently do we review our
financial family goals against our strategic objectives and growth trajectory, and
how sensible is our payout ratio when considering business growth ambitions
and family growth rate?
What is our preference regarding taking on external debt – high leverage vs.
zero leverage? When did we make this decision, and does it still uphold when
we consider our financial needs and growth ambitions?
In the context of generational wealth transfer, is money given considered a gift,
or does it come with expectations and conditions? What values and beliefs
guide us when we valuate our business in the context of a generational transition
of ownership and management?
Do we want to support family members’ entrepreneurial initiatives financially? Do
we have a sensible, transparent, and agreed-upon process to discuss family
members’ requests for financial loans that we follow?
How do we educate our family members’ significant others on our shared
orientation around money and wealth? How do we discuss differences in money
scripts with individuals who join our family through marriage and partnership?
34
The manner in which family members manage, utilize, and discuss money holds
significant implications (Furnham, 2014). When families claim to be fighting about
money, things are rarely that straightforward: Rather, the conflict often centers
around a perceived injustice, past or present, that is masked as a money
disagreement. Regardless, telling a family member that you are hurt about how they
have treated you in the past, or that you feel that they have always been favored by
your parents is much harder than refusing to agree to give them a loan, access to
the family vacation home, or deny them a raise. That is why many of us are left
wondering when conversations that should be seemingly simple – agreeing to a
sensible bonus for a high-performing family CEO – turn ugly: Because (some) family
members may not fight about what they claim to disagree with. To deal productively
with a situation like this, we have to be willing to engage in a conversation around
the underlying issue – even if it is emotional and potentially painful in nature.
Oftentimes, families (rightfully so) involve an outside facilitator for these types of
situations to not divulge into accusations and defensiveness.
Lastly, families should also be wary of avoiding money conflicts – oftentimes by
throwing money at the “issue”. This is a great solution in the short run, but
ineffective over time, as the problem will likely keep popping up elsewhere until the
real reason for a person’s anger or disaffection is addressed and resolved.
When we disagree about money (for example when talking about dividends,
loans, or family employee compensation), does the conflict typically remain
focused on facts, or does the conflict sometimes become emotional, where
past issues or wrongdoings are brought up (over and over again)?
Do we have a history of avoiding talking about (or fighting about!) money, and
instead resolving or displacing conflicts – at least temporarily?
Disassembling Money Conflicts
35
The findings from our survey and the numerous books written on the topic of
educating children of wealth show not only the importance of familiarizing the next
generation with the rights and responsibilities that come with wealth – but also of
the lack of effort parents tend to put on this. As Verbeke et al (2022) state, wealth
(and the luxury and comfort that comes with it) should not be perceived as an
entitlement or an acquired right, but rather a privilege that demands responsible
stewardship. But the pressing question remains: How do we raise children of wealth
to have a sensible orientation towards money? [1]
Baron and Lachenauer (2021), based on anecdotal evidence suggest five practices
to avoid financially based entitlement in the next generation. These practices
include (1) avoiding limiting family members to a social circle of solely wealthy
individuals, (2) ensuring that children have a paying job (3) that they understand what
it takes to build a successful career, (4) allowing your children to fail, (5) and instilling
an attitude of gratitude. These practices will be most effective when parents
educate their children from an early age, and children’s evolving comprehension of
money and wealth grows dramatically between ages four and 10 (Webley, 2005). It
is therefore never too early to educate children about the value and role of money in
society.
Education About Finance and Wealth
“Thoughtful parents worldwide ask the same
questions: How can my children find their way toward
confidence rather than arrogance, and gratitude rather
than entitlement?” (…) “We need to have answers for
parents who realize that their children have never
known anything but comfort and opportunity, and who
wonder how to instill the same purposefulness and
resiliency in them that earlier generations learned
through necessity.” (Gersick, 2015)
[1] O n ly 30% of yo u n g ad ults i n th e US can cor r e c t l y answer t h r e e basic f i n a ncial l i t e racy
quest i o n s f ocusing o n t h e concepts o f i n t erest rate s , i n f lation, a n d s h are price
devel o p m e n t ( L u s a rdi & Mitch e l l , 201 4 ) . The authors explain in d e t a il t h e nega t i v e
conse q u e n c es o f f i n a n c ial i l l iteracy (e.g., ha r m ful e c onomic behaviors , lack o f f i n a n c ial
plann i n g ) .
36
Astrachan and Pieper (2020), based on rigorous analysis of financial literacy and
financial psychology literature suggest that financial literacy education should focus
on important financial concepts such as the meaning of money, a reasonable
orientation around spending and saving, trade, the value of the future, risk and
reward, investing, reading financial statements and financial analyses (see the table
below).
Moreover, early teachings should foster an understanding of the links between
actions and their consequences, laying a solid foundation for robust self-
confidence[1]. Nurturing financially responsible individuals requires tackling the
human tendency towards instant gratification. After all, “while not guaranteeing
success and a rosy future, self-control ability greatly improves the chances, helping
us make the tough choices and sustain the effort needed to reach our goals.”
(Mischel, 2014, p. 9).
21] I n o t h er words, w h e n a child u n d e r stands wh a t a c tion lead s t o which con s e q u e nce,
thing s b e c ome predi c t a b l e, which h e l p s the chil d u n d erstand a u t o n o my and re s p o n s ibility,
thus b o o s t ing self- c o n f i dence.
37
As children grow to understand the link between actions and their consequences,
this forms an opportune moment to introduce the concept of delayed gratification.
Transitioning from immediate rewards to appreciating the virtues of patience and
perseverance becomes a crucial lesson. This shift in focus is not merely about
postponing rewards but fostering an understanding that the real value often lies in
the efforts invested, leading to more fulfilling and sustainable outcomes (Astrachan
& Pieper, 2020).
Lastly, a nuanced understanding of the delineation between ownership and
management is crucial in preventing misguided expectations and entitlements.
When thinking about educating your children around the topic of money and wealth,
these are some of the conversations families might have:
Considering the many aspects of our wealth, what steps can we take to ensure
it acts as a positive force in our lives, and how do we safeguard against the
potential pressures it might bring?
Can we discuss a time when failure taught us something valuable? How did it
shape our perspective on effort and success? What can we do to create a safe
space to fail and learn from those experiences?
How can we structure our family discussions or activities to include practical
financial education that prepares family members for the responsibilities that
come with our wealth?
What are some ways we can integrate learning about finances and business
management in our daily lives to better prepare for the future?
What are some challenges or new experiences you would like to undertake to
build your resilience and understanding of the real world?
How can we as a family support each other in pursuing careers that are fulfilling
and contribute to our personal development, not just our financial growth?
How do you think we can use our financial resources to uphold our family’s
values and contribute to society?
38
In many instances, money is used towards a certain end, in other words, it is
instrumentalized. In many business families, we witness situations where money is
used to motivate family members to behave a certain way – or to prevent them from
behaving a certain way. It is used as a reward for desired actions, to punish when
goals are not met, to control and to manipulate. As Jay Hughes says so succinctly,
when money is not explicitly given as a gift, it is tied to expectations and conditions.
We want to point out one way of instrumentalizing money in particular, as it is –
according to our anecdotal experience – both prevalent in business families and
harmful in terms of associated outcomes: Using money as a reward.
There is a substantial body of research highlighting the fact that rewards tend to
backfire: They are not only short-lived but often have unintended consequences that
are detrimental rather than beneficial. As Adrien Furnham explains in his book, The
New Psychology of Money (2014) “psychological research has consistently
suggested that where money has motivational power, it is nearly always negative”
(p. 211). Rewards, in particular, can have a punitive effect because they are
manipulative. By making rewards contingent on certain behaviors, managers
effectively manipulate their subordinates, and withholding an expected reward thus
feels very much like punishment. According to self-determination theory, over time,
monetary rewards are also demotivating and dissatisfying because they undermine
perceived autonomy and well-being (Thibault Landry et al., 2020).
Compensation of family members working in the business or serving on the board is
an interesting topic in the context of instrumentalizing money. Almost 50% of the
firms in our sample either overpay or underpay their family associates or reward
family members equally regardless of role and qualification. Any of those strategies
are typically not sustainable and will likely lead the best talents to abandoning the
family business.
Oftentimes, such ambiguous compensation policies go back to a desire to refrain
from labeling family members as better or worse performers and to avoid
controversial conversations. In the short term, avoiding difficult conversations feels
much better than running towards the hard stuff, but it tends to not be sustainable in
multigenerational business families: Instead, you burden the next generation with
your sibling or cousin conflicts.
Using Money as a Tool
39
The case study example showcased a similar scenario: The remuneration
committee utilized bonuses not just as rewards for work well done, but as tools to
manipulate family dynamics. The bonus differential created a visible rift between
Amy and Mark. Instead of serving as a motivational tool, the monetary reward
became a symbol of unspoken power dynamics, escalating the already existing
family tensions. In order to become more aware of how and when money might be
used in our family towards a certain end, addressing these questions can be
valuable:
Have we ever used money as a way of incentivizing family members to reach a
certain goal? Are we routinely financially rewarding certain behaviors – for
example getting excellent grades at school? Do we tie such rewards to explicit
expectations and conditions?
Does our family use money to control or manipulate others? Who makes the
decision to use money as a source of control? What outcome are we trying to
achieve, and what actions and conversations are we trying to avoid?
How do we define fairness in terms of financial compensation within our family
business? What steps can we take to ensure that our compensation practices
are transparent and equitable, reflecting individual contributions and
qualifications?
Can we discuss a time when financial rewards created unexpected outcomes
within our family? What did we learn, and how might we approach rewards
differently in the future?
5
Further Research and
Conclusions
40
The role of money and wealth within business families remains a vastly
underexplored area in family business research. Building on the findings of our
research report, we have identified a few areas that stand out as opportunities for
future research:
How do families differ in their approach to setting dividend levels? Is it based on
business and/or family needs and expectations?
How do families go about when setting financial goals and expectations for the
business, and how do different levels of financial goals and payout expectations
impact business growth and capital structure?
How does family compensation (e.g., equal/below/above market, need-based
vs. role-based) differ based on the family’s money scripts? What are the
outcomes of such compensation practices, e.g., in terms of non-family
employee satisfaction and loyalty, access to top talent, family unity?
How do money scripts affect families’ financing and investment decisions and
their risk profile – and how does this, in turn, affect their growth trajectory?
How do owners’ approaches to valuing the firm differ, and how is it tied to their
understanding of the role of money or wealth vis-à-vis their role as owners and
stewards?
Based on our own experience with this research report, investigating the role of
money requires a sensible methodology that allows to capture this highly emotional
topic: While in candid conversations with business family, individuals openly share
their feelings of shame and anxiety around money, or the way in which their families
use money to manipulate or control others. However, we were not able to capture
these negative feelings around money and wealth through our survey, even though
we used scales that are widely used in financial psychology. Alternative, possibly
qualitative approaches may be more suitable to explore this topic in depth.
Future Research
41
Many of the deeply rooted conflicts and dilemmas faced by business families are, in
one way or another, linked to money and wealth. In many families, family members
have different ideas about the role of money in their family, how money should be
used and distributed, who should receive what, and why. Family members may even
disagree on the very nature of wealth, with some struggling to accept what they
have received simply by being born.
What makes things worse is that often, these differences go unaddressed – even
among spouses, it is said that “couples would prefer to talk about sex or infidelities
rather than how they handle family finances or how much they earn” (Atwood, 2012,
p. 1). Over time, this avoidance can fuel conflict: The failure of family members to
understand and have an honest conversation about the role and purpose of money
in their family can lead to tension and strained relationships.
A healthy relationship with money and wealth requires us to understand our own
money scripts, that is, our own relationship with and conceptualization of money and
wealth. Unless we understand what money means to us and why, we remain unable
to make independent and objective decisions related to money and wealth. If we do
not understand the money scripts of those whom we make decisions with, we may
be tempted to judge them for their money choices.
Once we know our money scripts and our family’s position on the family wealth
continuum, it can be valuable to engage in some scenario planning, taking different
money orientations, and considering related outcomes. There may even be value in
assessing prior money-related decisions and identifying how our different attitudes
towards money have affected the outcomes – what drove those decisions, and if
those were indeed the best decisions made for the long-term success of the family
and the business.
Families rarely fight about what they say (or think) they fight about, and money is no
exception. We may loudly complain about our brother’s salary – but in reality,
money fights are essentially proxy conflicts on issues such as generational trauma,
disagreements in values, differing goals, or feelings of moral responsibility, privilege,
independence, obligations, justice, equality, greed, resentment, shame, entitlement,
resentment, or self-esteem, to name a few. It is often just easier to argue about
money than to express feelings of inadequacy or loneliness (Shapiro, 2007).
Conclusion
42
This is why it is crucial to understand the role of money – what it stands for, what it
signals, and what it is being used for – within a business family. Money can serve as
a metaphor for security, competence, adequacy, commitment, acknowledgment,
and acceptance in a relationship (Shapiro, 2007)
.Psychology research has shown that even subtle reminders of money elicit
significant changes in human behavior (see, for example, Vohs et al., 2008 and Teng
et al., 2016). Even more so in business families, where money is not a commodity
but a defining element that influences and defines the family. It is the “common link
between family, business, and shareholder” (Waesche, 2017).
We, therefore, argue that having a transparent, healthy relationship with money can
be a defining element in the difference between well-functioning and dysfunctional
business families in the long run.
The foundation of such a relationship is, as is often the case, education. We need to
educate children about money from an early age: About where money comes from,
and about the rights and responsibilities that come with wealth and ownership. We
encourage families to normalize conversations around money and wealth and to
invest in financially educating their owners and stewards, to empower current and
future generations to be financially savvy.
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44
Dr. Anneleen Michiels is an associate professor and family business
consultant.
Anneleen is associate professor of finance and family business at the
Research Center for Entrepreneurship and Family firms at Hasselt University,
Belgium, where she educates at the undergraduate, graduate, and executive
levels. Her research, published in both academic and practitioner-oriented
journals, investigates the complex interplay of finance in family enterprises
and the families that run them. She connects academic research with real-
world practice as a Certified Exit Planning Advisor (CEPA), a Family Wealth
Advising Certificate holder from the Family Firm Institute (FFI), and an advisor
at Generation6 | Family Enterprise Advisors. She is also the founder and
coordinator of executive courses tailored for family wealth advisors at
Hasselt University. Anneleen is an editorial board member of the Journal of
Family Business Strategy, and a former family business chair of the
European Academy of Management.
Find Anneleen on Linkedin, or contact her at anneleen.michiels@uhasselt.be
Dr. Claudia Binz Astrachan is a researcher, family business educator, and
family business consultant.
Claudia has been leading the Family and Business Program at Lucerne
School of Business since 2014, and continues to provide research-based
and peer-oriented learning opportunities for family-owned companies in
Switzerland even after her move to the United States in 2013. In 2019, she
joined Andrew Keyt as the Head of the Governance Practice at Keyt
Consulting – a role that she continues to hold at Generation6. In this
capacity, Claudia worked extensively with the boards of some of the largest
private family companies in the United States. Claudia’s research and
practice are informed and shaped by her understanding of the role of family
cohesion, effective communication and conflict management, and family and
business governance that align with the values, culture, and objectives of
the owning family. She has received awards for her research from scholarly
and business organizations alike. Claudia is a board member of the
International Family Enterprise Research Academy and a former family
business chair at the European Academy of Management. She is a visiting
scholar at Witten/Herdecke University in Germany, and an affiliated
researcher at Jönköping University (CeFEO) in Sweden. Claudia is based in
Atlanta. She is fluent in English and German, and conversant in French,
Italian, and Spanish.
Find Claudia on LinkedIn, or contact her at castrachan@generation6.com.
About the Authors
45
