By Tim Chase
If you are involved with running a business, you are more than familiar with the concept of metrics. They are these crafty things we managers like to use to track productivity and make sure that we are on track to meet our business goals. Well run businesses take the creation and monitoring of metrics to a whole different level by constantly resetting goals and evolving the metrics to weed out complacency and drive action toward strategic objectives.
Somehow, when we come home at night, that hard nosed, driven manager that creates value at work softens up around the family. Families have this funny habit of talking back the way an employee would never dream of. If your family is anything like mine, let's just say I don't have the same authority when I get home at night.
When it comes to managing the wealth of a family there are few things that could be more important than creating the right attitudes and skills around dealing with the issues of having money. Most of our clients grew up of modest means so building money skills was a very gradual process, but for our children and grandchildren, it won't be so simple. They won't witness the struggles that it took to create the wealth, but will mainly see the rewards from having access to it.
In business terms we often talk about "lagging" metrics versus "leading" metrics. For example, sales are a lagging metric in that they are the result of a whole pipeline of effort that leads to the eventual sale. On the other hand, the pace of proposals or prospecting calls is a great leading metric of future sales.
For a family, the lagging metric might be how well children/grandchildren function with money. Are they fully engaged with the dynamics of the family wealth? Do they view the family wealth as a dependency or as a source of independence to achieve greater goals? Are they engaged in careers? Meaningful volunteer work?
To get control over these questions, it is best to focus on the leading metrics. Every family is different and the dynamics of that family will drive the metrics but here are some common ones I see often:
These are just a few ideas of some leading metrics. If the goal is to have children and grandchildren who are well adapted to wealth and prevent a situation (that we all see too often) where wealth becomes a liability to leading a meaningful life, then focus on the right metrics for your family.