ILMA Compoundings - June 2020 - 32

BUSINESS HUB

Relationships Between
Family and Non-Family
Employees
By Stephen L. McClure, Ph.D., and Christopher J. Eckrich, Ph.D.

I

n our experience working with family business, we often hear of key
non-family employees who become
anxious or frustrated when working
with, or overseeing, family employees
- especially in the next generation.
We commonly hear reports of family
members underperforming or being
under-qualified for the positions they
are given, displaying attitudes and
behaviors that would get non-family
employees fired. Fortunately, there are
successful strategies for avoiding situations that can lead to discouragement
and deteriorating motivation for your
non-family managers and unsatisfying
results for the business itself.
The first step is to develop a clear
and transparent process for integrating
family members into the business.
Often, families handle family employment in a very informal manner,
and history has shown an informal
method is much more likely to
produce negative family employment
complications. A clear process might
include the establishment of a summer
jobs program for high school students
who will work in basic jobs for the
company, an internship program for
college-aged students in which they
are exposed to higher-level information about the firm and its products
and services (excellent for future
owners who are not likely to actually
work in the business full time), and
a formal process for orienting family
members who intend to enter the

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JUNE 2020

| COMPOUNDINGS | ILMA.ORG

business full time as their chosen
career. Most important is to get this
process outlined on paper and to
then communicate the ground rules
to everyone in a family forum. This
helps set expectations and allows
junior-generation family members
to understand the opportunities and
responsibilities involved in working
with the family enterprise. It also adds
to family credibility in the eyes of
non-family employees.
In addition to a process for integrating family into the business, a second
critical element is a family employment policy guiding the requirements
for family members seeking employment. It is the ownership group's
responsibility to seek alignment on
expectations for employment, as unity
around these expectations will protect
the family from unnecessary conflict
in the future and will allow the ownership group to speak with one voice.
A typical employment policy clearly
defines the path to employment
for the next generation, answering
questions such as:
*	 Does the policy apply to lineal
descendants only? What about
spouses?
*	 Who do we go to when we wish to
apply for a position?
*	 What education is needed before
we can work full time in the
company?

*	 How many years of outside work
experience are needed before we
can come in full time?
*	 Can we work directly for another
family member?
*	 How will our pay be determined?
*	 How will promotions be determined?
*	 What is the process for receiving
performance feedback in the new
position?
*	 Can a family member be terminated? If so, by what process?
The employment policy is necessary
but not sufficient to guide family
employment in a positive direction.
The third component needed to
navigate family employment issues is a
code of conduct to guide behavior on
the job. The ownership group has tremendous power in guiding productive
family behavior by working together
to forge a set of expectations to which
family members can aspire. The code
of conduct drives behavior by articulating the family's expectations about
the following:
*	 How are we expected to perform
on the job?
*	 What attitudes or behaviors are
expected toward our supervisors,
peers and direct reports?
*	 What communication expectations exist between fellow family
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