SAT 16TH DEC 2017

RSS:

Bringing the family business community together

Work With Family & Still Enjoy A Summer BBQ

13th June 2014 Susan Hoyle - Family Business Solutions

Leading family business consultants, Family Business Solutions, look at the advantages and disadvantages of working with your family.

One of the advantages of having your own business is the opportunity to work with your nearest and dearest.  On the plus side it is difficult for any other type of business to match the commitment and flexibility, in pay and other conditions, that can result from employing family.  However, decisions about employing and remunerating your relatives can easily become stressful, to the extent that family relationships are harmed.  

Since the possibility of family joining the business is hardly unpredictable, if you would like to work with your family and still enjoy family get-togethers, like a summer barbeque, you need a policy that sets everyone’s expectations about how these decisions will be taken.  

Purpose of the policy

The policy should begin with a clear statement of its key aims and objectives. It could be to encourage family members to join the business so that the advantages and enjoyment of working with your relatives are secured.  It might state that every family member is entitled to a job in the business at some level, or that employment will only be offered to family members with skills and experience that satisfy the current needs of the business.  

Who is affected by the policy?

Will the policy apply only to your nuclear family (children and grandchildren) or will it cover a wider family group including nieces and nephews and cousins. A key decision is whether or not spouses and partners will be covered by the policy.

What types of jobs are available?

It is helpful to distinguish between managerial positions, non-managerial full-time positions and part-time/casual/summer work because access to these types of jobs will usually be managed in a different way.

Depending upon the type of job, what qualifications/experience must family members have?

The policy could state that certain jobs require a degree or other equivalent qualification, while others require no specific qualifications.  Instead of, or as well as, formal qualifications, you might want to require “applicants” to have worked outside the business before returning and perhaps to have achieved a specific goal, like a promotion.  

Depending upon the type of job, how are family to be treated in certain areas?

The difficult issues are in relation to interview and appraisal processes and grievance and disciplinary procedures.  Should a direct relative of a family member be involved in these decisions or should an outsider be involved in some way.  It’s not always desirable to state that family will always be treated exactly the same as non-family, if that results in someone appraising their relative or deciding whether or not to fire them.

Remuneration

Remuneration can become confused by a lack of distinction between what part of income is salary for a job, what perks are received and what is the return on investment if the family employee also holds shares.  It is useful to clarify these distinctions even where, for tax reasons, income is drawn from the business by various means.

Discussions on this topic between the senior and younger generations of a family (if they ever take place) can sometimes become confused by the notion that “one-day this will all be yours” which, when mixed with a bit of “we made sacrifices in our day” from the seniors can translate into a lower current salary for the younger generation.  It is easier for the younger generation to accept these arguments if it is clear when ownership will transfer.

It should also be borne in mind that family are usually expected to be more committed to the business and contribute more than other employees, which may justify family members being paid more.  

Education and training

Some policies provide for education and training of family members, for example, financial assistance with an MBA or skills training for the role to be filled by family members, including directorships.  This is often linked to the requirement for specific experience or qualifications mentioned earlier.

Adoption and review

This type of policy should be discussed by the family, the owners and board of company or partners in a partnership.  Even if these are the same people, (which is often the case) you should distinguish your needs and expectations as a family member from those as a businessperson, in order to make the right decisions for the right reasons. 

For example, if as parent you want to guarantee family members a job in the business because it will help the family to remain connected, then do that, but it’s better not to justify the decision as being solely for business reasons.  

An employment policy needs to be reviewed reasonably regularly to make sure it is achieving its overall purpose and is keeping in step with the changing needs of a growing family and a growing business. 

Being in business for yourself gives you many advantages and opportunities, but when business needs and family duty and desire cross over it can become difficult.  It is then very useful to have in place clear polices that have been created calmly, rather than hoping that you can navigate these issues in a way that balances the needs of your business with the desire to be able to enjoy a summer barbeque with your family.

About the author - Susan Hoyle is a family business specialist who works with family businesses and business families to ensure both the business and the family are, and remain, in good business health. Susan is readily available for commentary and expert input on family business issues.  Susan can be contacted through sjh@ukfbs.co.uk

 

Tags

Sign up to our newsletter for email alerts

Supporting Links

N/A

Assets

N/A
comments powered by Disqus