I’m just back from a family business conference in Istanbul. 70+ multi-generation families from across Turkey convened with the International Family Business Forum to discuss succession and wealth transfer. I gave a talk on preparing the next generation for these happenings and am still processing the the comments that were provoked by my session. I plan to report on it in a few days (when jet lag and brain function have sorted themselves out).

In the meantime, I thought I’d share this piece written by Paul Sullivan for the NYT last Saturday. He quoted me liberally and the piece has elicited strong response from families living through the issues he writes about and that I comment on, as well as from commentators who seem to think that helping ‘rich kids’ is an outrage.

Though I’m deeply concerned about the vast chasm between rich and poor in this country, scapegoating kids who are growing up with means doesn’t seem especially productive. Our job is to provide them with tools to deal with issues that are the unintended consequences of inheriting wealth, not to castigate them for their fate.

As always, I look forward to your comments.

The headline was chilling to firms and families alike: “Growth of Unpaid Internships May Be Illegal, Officials Say.”

In a market offering fewer opportunities for high school and college-age students to acquire life skills once developed as part of a summer job experience, internships have become a significant source of experience and an important part of the launch process for the next generation. But abused by some employers who overuse kids as free summer labor, many companies will become wary of government oversight and may back away from offering internships altogether.

This will be bad for kids—and for companies. Young people will have fewer opportunities to observe and experience the culture of a variety of workplaces, and companies will have fewer low risk ways to vet potential employees.

But there’ s no cause to panic, for either intentional families or good companies. This is an easy—and an important—challenge to manage. The U.S. Department of Labor published [PDF] six criteria for determining if an internship is legitimate or just a thinly disguised means of getting free labor. And the internships we’ve been involved with at IMI meet all these requirements without a stretch.They are:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational institution. This means that the internship setting must treat the intern as a trainee and provide actual instruction. This is what you want anyway. Young people should be able to observe and try activities that are part of a real learning plan. The student can work with employers to create such a plan (much like an independent learning project). Companies can design these as well.
2. The training is for the benefit of the trainees—or intern. While companies certainly benefit from having a chance to observe potential future employees, MOST legitimate internships are too time consuming and expensive to be of much help to the intern host. Free labor is a lot less ‘free’ than most people understand but when the terms of the internship are explicit, this aspect of the criteria is easier to meet.
3. The trainees (interns) do not displace regular employees, but work under their close observation. Since most internships we’ve been involved with only last from two to eight weeks, there is little danger interns are displacing real employees. But this is a workplace accountability issue and one that can be clarified at the start of the internship.
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded. Indeed, most internships are done as an act of generosity on the part of the employer. Hosting an intern takes up valuable time and resources. Because an intern can hardly understand the environment in less than three months, let alone make a meaningful contribution to the workplace, employers are making an investment in the future when they offer an internship, not gaining immediate advantage.
5. Trainees are not necessarily entitled to a job at the conclusion of the training period. Particularly if an intern is still in school, this is not immediately relevant. But IF the intern goes back to school, or on to another internship and later returns to apply for a job independently, there is no foul.
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training. This is the easy one as most internships are established as free experiences. In some cases the family pays a third party or the employer for young people to gain exposure to industries, professions, and environments they have some interest in or curiosity about.

Internships are vital as vehicles for helping the next generation integrate into the social network of an entrepreneurial culture. Giving kids access to role models, specialized language, and industry knowledge is key to helping them launch into adulthood. Now is not the time to panic. It’s time for next gen members and their families to plan and propose an internship for the summer experience of choice.

Source: U.S. Department of Labor “ADVISORY: TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 12-09”

Our very own Scotty Claus (a.k.a. Scott Martin), founder of The Living Christmas Company, has just been featured in The New York Times.

Our 2009 campers had the chance to meet Scott, tour one of his tree nurseries, and talk with him about the ins and outs of starting his own company. It was a Camp Start-Up highlight and one we hope to repeat next summer.

New York Times has a great breakdown on Who’s Hurting the Most in the job market. The results from this must-read article are interesting,  if not surprising:

- The young (16-24) took greatest hit. Unemployment has grown from around 10 percent in 2007 to 19.1 percent in October
- Those 25 and older without a high school diploma fared worse then those with college degrees. While the rate of unemployment for those with degrees has more than doubled to 4.5 percent, unemployment for those who didn’t finish high school soared from 6.5 percent to 15.5 percent.
- Men fared worse than women “largely because men are disproportionately employed in industries that are more sensitive to the business cycle.”
- Blacks, fared worse than Latinos, and both fared worse than Whites.

We’ve talked a bit about youth unemployment and expect to talk about this a lot more over the coming months. Politics and policy aside, a central point remains true: adults need to be mindful of what the high-unemployment rates mean for young people. They need to serve as coaches and help allow young people to grow, learn, and mature, even if there aren’t paychecks waiting.

Sergey Brin, one of the Google guys, renewed his philanthropic commitments and displayed his mastery of Money Skill #10 by giving $1 million to the Hebrew Immigrant Aid Society (HIAS). The donation marks the 30th anniversary of Brin’s family’s immigration from the Soviet Union to the United States, a move that HIAS made possible, Brin told the New York Times. Brin said he hopes the donation will let other people enjoy the opportunities he has:

I would have never had the kinds of opportunities I’ve had here in the Soviet Union, or even in Russia today … I would like to see anyone be able to achieve their dreams, and that’s what this organization does.

Apparently prodded to defend the size of his gift in comparison to his personal wealth (NYT estimates Brin’s personal wealth is $16 billion), Brin said the money he has given so far, including donations to the Michael J. Fox Foundation, is part of a growing strategic plan:

We’ve given away over $30 million so far, which isn’t so tiny but obviously small in terms of our, um, theoretical wealth … Our philanthropy is something I want to take my time with and develop and systematize.

The Wall Street Journal, the New York Times and others note results form a recent Gallup poll indicate businesses owners are the happiest workers. The least happy? Transportation and manufacturing workers. Writing for the Wall Street Journal Sue Shallenbarger explains,

The findings, psychologists say, reflect the importance of being free to choose the work you do and how you do it, the way you manage your time, and the way you respond to adversity. Regardless of occupational field, the survey suggests that seeking out enjoyable work and finding a way to do it on your own terms, with some control over both the process and the outcome, is likely for most people to fuel satisfaction and contentment.

This  comes despite the fact that the self-employed work the greatest number of hours per week and have a high likelihood of seeing their business fail. But the benefits of doing what one loves, having a sense of control, and having ties to the community seem to outweigh most all else. This comes as a happy affirmation of one of Independent Means Money Skills and of our latest lesson plans on entrepreneurship for a growing family.

Getting ready for our Fashion and Finance Retreat, I’m  paying attention to who’s saying what about fashion. So Vera Wang got my attention this week when she said:

“In my 40 years in fashion, I’ve never seen women scared to shop — at all price levels.” [Vera sells dresses at $2000 a pop, as well as a line for Kohls that offers dresses closer to $100 and under.]  “I don’t know what’s going to happen,” she said, referring to the future of prestigious labels.

The tension between the micro-economics of fashion (smart consumers rethinking their spending priorities) and the macro-economics of the industry (jobs, creativity, leadership, profits, etc.) is causing tremors in the world of fashion.  The size of the earthquake–and what it means to both consumers and investors will be one of the topics covered at the Retreat Oct. 9-11. I hope you’re as excited about it as we are.