by Dan Beenken
First, I just want to thank everyone who joined us for Session 4 on family compensation topics. We had a great crowd and look forward to continuing to see you and your families at future events.
As I mentioned, session 4 was all about money. We had a great panel of business families and consultants engaging with our members on discussion of fair versus equal in a family business, how to treat active versus passive family members, bonus pools, salary surveys, and a host of other issues.
As I always try to do with our breakfast series sessions, I wanted to put together my top 3 “nuggets of knowledge” that I took away:
1) Consistency is key – Developing compensation policies for family members should always be done in a consistent manner. Utilize set formulas and processes to ensure that you have justification for pay differences and can easily defend them – especially to Next Gen spouses and family who do not work IN the business.
2) Pay Market Rates! – I see this as the most important takeaway from our last session. Paying a son or daughter more than you would another employee for the same position is the fastest way to create chaos. Non-family employees and non-active family members will use this as fuel for all kinds of dysfunction, contempt, questioning, jealousy, etc. If you want to incent family to work in the business – consider a bonus pool or other comp planning.
3) Develop a plan before you have a problem – Hopefully this one is self-explanatory. It’s always a healthier experience to work through something before it becomes a problem. Getting your family together to talk through the “how” and “why” will allow you to get things on the table before they become massive issues for your family.