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What Should an Employment Policy Contain?

Dear Advisor:

We are a second-generation family business with family members both in and out of the business.  We think that we need a hiring policy for the next generation of family members.  Do you have any suggestions as to what we need to think about in generating a policy and what it should contain? 

An employment policy is an excellent tool to ensure that family members have adequate preparation to enter the business. And, it guarantees equitable treatment of members within and across generations.  Some questions that you should consider include:

  • Who will be covered by the policy—the family members only or spouses as well?
  • How much experience outside the business do you expect family members to have prior to entering the business? (We recommend outside experience.)
  • What level of education will be required to qualify for employment?
  • How will family members enter the business—at entry level, management level, etc? (We recommend entry at the level for which they would qualify as a non-family member.)
  • How will family members be compensated? (We recommend the same pay scale as non-family employees)
  • Should family members report to other family members? (We recommend that this should be avoided if at all possible.)
  • How will family-members’ job performance  be evaluated and who will be privy to this information?

While some general recommendations are provided above, the right answer for your business is dependent upon the nature of the business as well as family members.  But, it is a good idea to put a policy in place, regardless of the circumstances you face.





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