Advantage Family Business Center

by Karen Calcagno
(Soquel, CA, USA)

Every business, big, or small, public (government) or private needs to remember that treacherous moral hazard exists when personal consequences are removed from any action taken.

Family owned and operated business knows this at a cellular level. The push/pull dynamic that exists because of the differing needs of family and of business yields very visible consequences when we, as family business owners, don't keep a clear focused eye on our goals--both business and personal.

In a family, resources are usually allocated according to need. In a business, resources should be allocated according to goals met. If we confuse those two venues and pay a family member because they NEED the money rather than because they EARNED the money,it isn't too long before the moral hazard is apparent.

If the people running our government had to live by the rules they put in place, we probably wouldn't have so many outrageous rules.

If the powers running the government had to manage the cash flow out of their own account, they would pay better attention to the details (we hope).

If every elected official had to have personal business experience before being elected, we would have a very different situation in front of us now.

That's my soapbox!

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