In March 2011, I spoke at a seminar in South Africa held by global audit, tax and advisory company Mazars, where I talked about the business of hiring family members.
It goes without saying that every owner of a family business faces the issue of whether to hire particular family members throughout the years. If the business is to thrive, there should be conditions attached to getting a job in the family firm.
Establish the bar and make it fairly high, or you’ll end up with less than competent people. The goal should always be long-term, prudent stewardship of the family enterprise.
Young family members should gain three to five years of work experience outside of the family business before joining it. They need to prove themselves elsewhere first, and learn how to be a good employee.
There should also be a real position available, and the family member should have the right skills to fill it. Otherwise you’re using the business to do what the family should do – provide unconditional support.
Setting the ground rules early is important, in order to avoid misunderstandings later. Draft a family employment policy with clear guidelines. This becomes particularly important when the business survives beyond the first generation, as increasing numbers of family members come knocking on the door.
The policy should define the procedures, process and criteria that govern how family descendants and/or their spouses enter and exit the family company’s employ. It should remove ambiguity.
Family members should have to meet the same criteria for hiring as non-family applicants. They should be expected to meet the same level of performance required of non-family employees. Family also should be subject to performance reviews and to the same rules regarding firing. It’s less complicated when non-family employees supervise family members. Finally, compensation should be at fair market value for the position.
Following these guidelines will help the business to thrive and make for happier employers and healthier family relationships.
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Family Business Matters has extensive experience assisting family businesses. With many decades of experience, we understand the wide variety of challenges that families face as they work together to build, grow and sustain a thriving family business generation after generation. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.
For more information on how Family Business Matters can help your family business survive and thrive, please contact us today at (970) 948-5077.