Family Employment Guidelines

By Davon Cook on July 30, 2018

By Davon Cook

Alleah explained why defining expectations can be helpful in your family business. Let’s look at family employment guidelines as an example. Because we run businesses that value family members and often desire that they continue the enterprise, it’s not uncommon to see multiple generations welcomed into employment. This can be a strength or a weakness—and often is both. It is wise to put thought and conversation into defining if, when, and how family members will be employed—and then how their career will be supervised and managed.

If: What is our philosophy about family employment? Is it encouraged? Is there limitation to how many? Is there any concern that limits spouses working together? Are there other guiding philosophies?

When: Are there requirements about what education, life experience, or job experience one must acquire to be eligible to join the enterprise? We see these range from no prerequisites to extensive requirements (e.g. that one earns a college degree, works for a non-related business 3-5 years, and is promoted to manage people) and everything in between Some require that the new employee bring an “enterprise” with them to grow the business.

How: Is there an expected career path, such as start at the bottom and work one’s way up? Or is there a rotation program before one “lands” in a permanent position? Other considerations: some try to have a new family member not report to his/her parent, at first anyway; some have a rule that no “new” positions will be created for family members, they must fill an empty spot, while others explicitly plan to invest in next gens as a growth strategy regardless of open positions.

Ongoing career management: How will a family member’s performance be evaluated over time? Consider how to obtain unbiased feedback to mitigate the risk of nepotism clouding the picture. How will compensation be determined? Notice that I am using the word “guidelines” rather than “policy.” For me the distinction is important. It’s important to be on the same page about expectations. But in practice, don’t write your rules so strictly that you lose sight of the larger goal: bringing talented family members into the business in an organized manner that sets all up for success. There is no “right” answer to any of these questions. It’s a matter of finding what fits your situation and your family’s expectations. We encourage relevant decision makers to create written guidelines, and then share those expectations with the upcoming generations sooner rather than later. Helping all understand the expectations builds future success.