Q4 2019

Wealth & Finance International - Q4 2019 7 “Two social systems are at work in all families. The homogeneous system of being similar, the drive for unity, and the heterogenous system of being dissimilar, the drive for autonomy. These systems create interpersonal tension and ambiguity that must be anticipated and managed in a legacy family and family business.” Edgell Franklin Pyles, PhD Thomas Edward Pyles, MA Emotional Economics: The Challenges of Mixing Love and Money in Family Businesses and Legacy Families Family Tension Emotional Economics: The Challenges of Mixing Love and Money in Family Businesses and Legacy Families problem of how to continue life by being either competitive or cooperative and on the economic survival level this involves money. A study conducted with children, ages 3 to 6 years, showed that they did not understand the economic value of money, but they comprehended its emotional value. The first group sorted coins and banknotes, while the second group sorted buttons and candy. The children who worked with money demonstrated an increase in egotistical behaviors, were less eager to help the researchers, corralled more awards for themselves, were less likely to share their rewards with the other children, but were more persistent in completing individual tasks. Handling money reduced feelings of helpfulness and generosity while increasing perseverance and effort. These results are very similar to the results of a comparable study that looked at adult behavior. According to Agata Gąsiorowska, economic psychologist and a co- author of the study: 3 “Money is such a strong symbol in the world based on economic exchange that even small children are influenced by its significance. Money causes people to switch from the view of the world that values close relationships to the world that values market exchange, where the notions of ‘me’ and ‘my gain’ are in the center.” Emotions, often considered “gut feelings” or conscious experience, really involve many systems within our brain. Emotions create a burst of activity devoted to one thing, survival. Emotions trump non-emotional events, like thought, reason, and decision-making, even in the most rational analyst and business leader, because they are older in the human developmental process than economics. Emotions kept our ancestors alive long enough to create and give us an inheritance. Emotions, even those in our memory system, trigger certain features, feelings, and stimuli that are designed for homeostasis. Homeostasis is a self-regulating process by which our biological and psychological systems try to maintain stability while adjusting to conditions that are optimal for survival and success. In love and war, as in family and business, when homeostasis is successful, individual and collective life continues and flourishes. There are “natural triggers” like the sight, sound, and smell of a predator and “learned triggers” like the sight, sound, and smell of money that aid us in the pursuit for homeostasis. 4 About 10,000 years ago, when the first farmer created more than his or her family could consume, the economy of the marketplace began. Before the agricultural age, our ancestors were daily hunters and gatherers, collecting and consuming without the ability or surplus to “store up” resources. When farmers took their extra bags of gain to the marketplace they needed a symbol of exchange. In time, this symbol became money. From that time forward, there are few interactions or decisions in a legacy family that do not involve money and a drive for the family to flourish. The recent college admission scandal in the United States is a brazen example. Money is an emotional trigger in families and how we react to it may be either positive or negative. In order to have a positive environment, family leaders must work toward stability between two social systems that continuously change as individuals change. The two social systems are the homogeneous system of being similar, the drive for family unity, and the heterogeneous system of being dissimilar, the drive for personal autonomy. These systems create interpersonal tension and ambiguity, along with creativity and drive that must be anticipated and proactively managed in a legacy family and family business. Wishing that anxiety or conflict would depart the family system or that love and harmony would show up is usually not enough. The tension among family members is from four psychological positions; Fight, Flight, Freeze and Flow . Three positions, Fight, Flight, and Freeze , are an extension of our evolutionary survival system. The fourth area, Flow, is the way to happiness and success. 5 It requires psychological awareness, behavioral adjustment, and positive action on the part of family members and leaders and is difficult to create and maintain as family members grow and change. Autonomy (Personal Confidence) Unity (Relationship Security) High High Low Low Tension FLIGHT Counter-Dependent “Moving Away” Isolated, detached FLOW Inter-Dependent “Moving With” Cooperative, Maturity, Resiliency FIGHT Hostile-Dependent “Moving Against” Confused, Angry, Oppositional FREEZE Co-Dependent “Moving In” Enmeshed, Entangled, Anxious