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10 Jun 2014
Traditionally, family run businesses will pass on ownership through the generations without issue however where a number of family members become involved, rivalries and in-fighting can cause problems detrimental to the business. Where a family business has grown, it may well be that family members cannot provide all of the necessary skills required at a senior level and external recruitment is required.
When a family firm deals with employees, irrespective of whether they are family members, efforts should be made to ensure a level playing field in relation to policies, remuneration, promotion and standards of conduct.
There are a number of matters to consider when recruiting family members into a business. Below we consider a few of these:
It may be a tradition and there may be considerable pressure to recruit or to promote a family member. Before they become employees, ensure that family members know what is expected of them and decide whether they are able to commit.
As above, moving a family member into a role merely to accommodate them within the business will cause major issues if they are not right for the job. For example, they may simply not cope and/or it has the potential to alienate other employees who consider that they should be in the role or who then have to spend considerable time covering for inadequacies. Promotions of family members should be dealt on merits and no differently to other staff.
Family rivalries can run deep. There is nothing wrong with some healthy competition but do think about who you place to work with whom. Sometimes, having a family member mentored by a non-family member may achieve better results.
Can you be objective when assessing a family member’s performance? Subjecting employees to consistent benchmarks and structured appraisals regardless of who they are can avoid these pitfalls. Being either too soft or too harsh can have negative affects on employees and give a wrong impression about both progress and development.
One of the most obvious causes of friction can be remuneration. Unless family members become shareholders or partners in a business then they should be subject to the same means of assessing remuneration. Again, a consistent approach will allow you to justify a wage and help avoid those awkward conversations. Again, this sort of transparent consistency will go along way to helping other employees feel more comfortable.
You will need to give consideration to who decides upon appointments to the board. You must consider the size of the board and the spread of expertise. Planning for existing family dynamics within the board room can be difficult.
As is often the case with employment law advice, consistency and fairness are essential. Make sure that policies are clear, concise and well communicated amongst staff. Stick to them as best you can and don’t apply different values to non family members of staff.
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