Managing Family Employment--A Tough Balancing Act
More and more family businesses are putting in place employment policies that define requirements for family members entering the business. In our April 2007 issue, we shared some highlights from family employment policies. As we noted, while families differ in their approaches to family employment, typical requirements for employment in the family business include a college degree and work experience outside the family business. The merits of these requirements are hard to dispute. They ensure adequate preparation for the job. They allow young family members to get exposure to other businesses and, hopefully, to demonstrate success outside their families’ businesses. By doing so, these requirements help to provide credibility for family members with the larger employee base.
While strict requirements for employment help to ensure that family members are qualified for their jobs in the family business, there can be a downside as well. These requirements can discourage family members from joining the business. As facilitator of a family meeting for a large family business, I was put in the awkward position of fielding questions from the college-aged next-generation members about their opportunities for employment outside the business. One next-generation member stood up and asked – to the shock and dismay of his grandfather, the founder and chairman of a sizable empire – how much money he could make with his engineering degree working for a Fortune 500 company. It became clear that, in pushing next-generation members to obtain an education (in this case requiring a graduate as well as undergraduate degree), the family had unintentionally encouraged family members to seek permanent jobs elsewhere.
Certainly, many next-generation owners of family businesses are excited about working in the family business. But others may perceive a strong downside. After all, they have watched their parents labor long hours, listened to their complaints and worries about the business around the dinner table, and heard the message that they had to earn their spots in the business. The footsteps they follow may seem impossibly large to fill.
Policies that set out qualifications for employment can be an important part of professionalizing a family business. They reduce the likelihood of unqualified family management and ensure a more level playing field for non-family employees. In doing so, they allow family businesses to attract and retain more qualified non-family employees.
However, these policies need to be accompanied by exposure to and education about the family business and family legacy. Such exposure allows young family members to develop an interest in and appreciation for the business and to decide if the business is interesting to them. This exposure can occur formally through family meetings, internships and orientation programs, or next-generation education programs, or it can occur informally on visits to the business.
So if you are considering a family employment policy or already have one in place, make sure it is balanced by appropriate encouragement of next-generation interest as well. Even if next-generation members decide they are not interested in working in the business, this exposure ensures that they will be good owners and stewards of the family legacy.
Articles purchased or downloaded from Family Business Consulting Group® are designed to provide general information and are not intended to provide specific legal, accounting, tax or other professional advice. Since your individual situation may present special circumstances or complexities not addressed in this article and laws and regulations may change, you should consult your professional advisors for assistance with respect to any matter discussed in this article. Family Business Consulting Group®, its editors and contributors shall have no responsibility for any actions or inactions made in reliance upon information contained in this article. Articles are based on experience on real family businesses. However, names and other identifying characteristics may be changed to protect privacy.
The copyright on this article is held by Family Business Consulting Group®. All rights reserved.
Articles may be available for reprint with permission. To learn more about using articles for your publication, contact firstname.lastname@example.org.