The Importance of Family Business Policies
In a family business where the founder/owner is still in charge, decisions
around ownership, employment, compensation, and governance are relatively
uncomplicated and typically unchallenged. It is a work environment where the
decision maker is not held accountable for strategic or operational choices for
the most part.
However, when the junior generation(s) becomes involved in the form of
sibling and cousin teams, it is difficult to escape the complexities that come
with diverse personalities, values, and perceptions of what vision is best for
the business and the family.
Policy development emerges as a necessary process when the business grows and
multiple generations become involved. Ownership changes prompt junior-generation
members to feel the need for some established parameters that will guide
decision making but also create some degree of objectivity around their choices.
Our experience has shown that family business polices need to emerge from the
values, beliefs, and principles of the family. In addition, an inclusive
decision-making environment must exist in order to gain buy-in around policies.
An employment policy, for example, prompts family members to examine and
reconcile their opinions around a number of issues, such as what criteria must
be met in order to work in the business, how family members will be appraised
and held accountable, how they should be compensated, and what happens if they
do not meet expectations. These are important issues, and building consensus
around them can be difficult and emotional.
Families gain enormous benefit from the development of policies that will
shape their interaction around critical issues in the business. Formal policies
also help the family learn to communicate, to lead, and to send a message to
employees that expectations must established, communicated, and adhered to in a
professional work environment.
Kelly LeCouvie is an associate with the Family Business Consulting Group,
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.