Keep ownership, management and family membership apart, because being family does not automatically bring a job, a salary or decision rights. Write the rules in a family charter, and apply the same standards to family members who work in the company as to every other employee.
Step by step
- 1
A written family charter
Who may work in the company and with what qualifications, how profits are distributed, how disputes are resolved, and how shares pass on.
- 2
Jobs with descriptions and standards
A family member is hired into a role with a job description and performance indicators, and is appraised and promoted by the same standards.
- 3
Keep salary separate from profit
Those who work receive a market salary for their role, and profits are distributed to owners according to their shares, whether or not they work in the company.
- 4
Separate meetings
A family meeting for ownership and values, and a management meeting for business matters, and no business decision is settled at the family dinner table.
- 5
Bring in an outside view
An adviser or an independent board member helps with major decisions and takes the heat out of disagreements.
- 6
Plan the succession early
Prepare the next generation or a professional manager from outside the family, and arrange the transfer of ownership with a legal adviser and a financial adviser before circumstances force it.
Placing a family member in a role that does not suit them to keep the family happy harms the company, weakens employees' trust in fair management, and hurts the family relationship itself when it goes wrong.
- family business problems and solutions
- how to employ relatives without problems