ILMA Compoundings - June 2020 - 33

employees? What information
do we share, and what do we
not share?
*	 Will we operate in conjunction
with the employee handbook on
all matters, or what exceptions
will exist?
*	 What are our expectations for vacation, time off and work hours?
*	 What will we do when we have
a conflict with other family
employees?
*	 How will we speak about each
other to spouses, family members
and others?
Having worked together to establish
the three components of integration,
the family must then communicate
with non-family management about
its hopes regarding family employment. This is best done at a forum
between the family shareholders and
relevant key non-family managers. In
this meeting, the family articulates its
vision for the enterprise, its commitment to the enterprise and the values
it intends to support in the business.
In particular, the family takes time to
articulate its deepest hopes around
family continuity and asks the key
non-family employee group for help
in achieving the above.
As the forum is a two-way dialogue,
non-family employees should be
given plenty of time to articulate their
needs from the family in meeting the
vision, gain clarity on whether they
will really be supported in helping the
family group reach its goals and express
any concerns they have about family
employment. This process can be used
to help key employees see what is in it
for them, such as ownership continuity,
a stronger organization (assuming
family policies support a stronger organization) and the freedom to supervise
family employees without backlash.

The weakened economy has led to
two emerging complications around
non-family motivation and family
employment: specifically, bringing on
new family employees while the firm
is downsizing due to economic pressures and the family's taking of perks
while non-family employees are being
asked to go without (e.g., pay freezes,
reductions in 401(k) benefits, etc.).
The first issue - bringing on
family employees - can be addressed
through the forum concept described
previously. The family can express
how important it is that they prepare
the next generation of family owners/
managers - and that they take a
long-term view in these matters. At
the same time, sometimes the family
needs to think creatively to limit the
disruption this family hire might
cause for non-family managers. One
suggestion could be to put the new
family hire's compensation above
the line on key managers' budgets
(e.g., putting their compensation in
overhead rather than in a key manager's operating budget). In this case, the
manager will be minimally impacted
by having a junior-generation family
member in "learning mode" on their
watch. In fact, it may be viewed
positively, as they get performance
from a family member without it
impacting their budget (and therefore,
their own compensation or bonus
calculations). This is often done for a
year or two, until the family employee
graduates from training mode and
begins to directly contribute to firm
performance.
The second issue - family perks
in a time of scarcity - deserves the
family's attention. Assuring that family
perks are not impacting employee
compensation structures negatively is
a start. While non-family employees
may be tolerant of family perks (those
perks not afforded to all employees
of the same authority level) in good
times, they may become very resentful

if they see the family taking benefits
when everyone else is being asked
to cut back. These feelings will be
especially strong if they believe their
compensation and benefits packages
are being influenced by events beyond
their own control, as occurs when
family employee perks are charged
to non-family managers' budgets.
Families do well to explore whether
family employee perks are hindering
employee motivation and to take
corrective action if this is the case.
As with so much else in family business, the strength of these companies
comes from the successful blending of
differing priorities or agendas - family
and business or, in this case, family
and non-family employees. While this
article details the effort required, it is
a great investment to think through
the challenges and opportunities that
come from the overlap of family and
non-family employees at your company
and to do what it takes to make this
a strong union. In our experience,
successful family businesses need the
commitment and enthusiasm of both
the family and a broad range of key
non-family employees and executives.
Stephen McClure, Ph.D., is
principal consultant and

Christopher Eckrich, Ph.D.,
is senior advisor at The Family
Business Consulting Group.

This article, originally titled
Building the Best Team Possible:
Relationships Between Family and
Non-Family Employees, was originally published on the The Family
Business Consulting Group's website. It has been edited according
to Compoundings style.

33



ILMA Compoundings - June 2020

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ILMA Compoundings - June 2020 - 1
ILMA Compoundings - June 2020 - 2
ILMA Compoundings - June 2020 - 3
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