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The Case for Family Member Employment Policies
November 30, 2007
Several years ago I was meeting with a 2nd generation family team. In my early visits with them I recognized that these 3 brothers had the ability to forget about giving each other the benefit of the doubt and rather “stick it in and break it off.” They illustrated this dysfunctional skill quickly. I learned right fast that they had no idea how to choose their battles wisely. Success to them was creaming each other.
The argument that had ensued was extremely petty and did not warrant this kind of battle. One of their wives was using a cell phone that was being paid for by the business and the other two didn’t know about it. Three brothers running a $35 million business having a conniption over a $35 phone bill – unbelievable!
I have lots of stories like this that illustrate the need for family member employment policies in family businesses. Here are a few guidelines for developing family policies:
- Be Pro-Active. Develop family policies before they are needed. It is much easier for family members to agree to policies when it has no immediate impact on them. As a business owner you are undoubtedly trying to anticipate economic forecasts and adjust accordingly. You need to do the same thing with your developing family and anticipate potential changes in the family landscape.
- Be Broad. Determine what kinds of policies are needed. Cover everything from criteria for getting into the business to compensation and perks.
- Be Thorough. Think through as many possible scenarios as you can. I highly recommend using a professional facilitator to help you develop policies. Inevitably, you will not think through it very well on your own, as in the case above where the argument was over what 2 years of employment meant.
- Be Smart. When the policies have been agreed upon document them. If it’s not on paper, it’s subject to greater interpretation and really doesn’t exist.
- Be Bold. Review the policies with all family members and have them sign the document agreeing to adhere to them. Understand that you are not likely to get complete agreement immediately. It may take a while to develop policies that everyone can agree on. It is also important to not impose policies on those who have to abide by them. Not respecting the input of your family members will surely set you up to fail in setting effective policies.
- Be Formal. Make a notation in your corporate minutes that the family policies have been adopted. Make it a formal policy of the business.
- Be Wise. Review the policies on a regular basis to determine whether or not refinements are needed. If refinements are necessary, repeat the above steps.
If you are wondering whether or not it makes sense for your family to develop and document policies that govern family relationships within the business, just remember this axiom – “Agreements preclude disagreements.”
Posted by Jeff Faulkner on November 30, 2007 | Comments (0)
