When family members go into business together, there is often a desire to keep ownership, and even operations “all in the family.” But as that business grows, it may become necessary to bring on outside talent. Planning for non-family employees before they hire into the family business can keep operations moving smoothly and help your company transition from “mom and pop” to a thriving small business.
Step 1: Defining Family Business Values
As with any small business, the first step to planning growth for your family business is to develop a clear strategic plan. This allows members of the family to share their visions, and their priorities for the company. Then the heads of the family business can hone those ideas into their key family business values.
A strategic plan is especially important for family businesses, because often the company is central to the dynamics between parents and children, siblings, and other relatives. Its assets and shares may be the older generation’s retirement plan, or the younger generation’s inheritance. The more central the family business is to your loved ones’ futures, the clearer your vision needs to be before planning for non-family employees.
Step 2: Identifying Gaps in the Family’s Skillsets
Once you know where your family business is headed, the next step is to evaluate what skills and tools you need to get there. Often, the matriarch or patriarch of a family business fills any gaps in the family’s skillsets. But no one can be good at everything, and as a business owner you likely won’t have time to do it all as the family business grows. Identify where your skills are thin, then plan for non-family employees to fill those gaps.
Identifying areas for growth or recruitment often requires outside help. This is especially true in family businesses. When your top employees are also your closest family members, it can be hard to see past the family myths or assumptions about key employees’ skills and personal career plans. A business consultant can help provide the family business with an objective analysis of your family’s strengths and identify opportunities for recruiting non-family employees to round out the company’s talent.
Step 3: Planning for Non-Family Employees’ Roles and Compensation
Family businesses (and other small businesses) often lack formal titles, roles, and compensation structures. Family members may be paid far more than their market rate. Business owners may sacrifice compensation to improve company profits. However, when planning for non-family employees, that loose business structure can quickly lead to conflict.
New non-family employees may feel they are treated unfairly if they perceive favoritism in how the boss’s sons and daughters are compensated (including non-pay benefits like flexible work schedules and time off). On the other hand, family staff may see postings for non-family employees and realize that their position is worth more than they are being paid.
As you plan to bring on non-family employees, work with a business consultant to properly define each role within the company. Then determine the fair market rate for compensation. You can deviate from that plan, but if you do, be clear about why, and what the disadvantaged employee is receiving in return.
Step 4: Developing Accountability Structures
Once a family business has non-family employees, it becomes essential for the company to develop formal accountability structures. Employees – family and non-family alike – need to know how to give feedback and report misconduct in a way that won’t jeopardize their position at the company, or in the family. This is especially important if non-family employees will be supervising or training lower-level family member employees. Without formal procedures in place, the non-family employees may be less than honest about family members’ performance rather than risking angering that employee’s parent, the business owner.
Get Help Planning for Non-Family Employees
Planning for non-family employees means taking your family business’s professionalism and corporate structure to the next level. It can be a big transition, but it isn’t something you need to do alone. Working with a skilled business consultant can help you develop your strategic plan, define non-family employees’ roles within the company, and formalize your processes so that all your employees feel safe, supported, and part of the family.
David Stanislaw is an organizational development specialist with over 30 years’ experience helping family businesses plan for the future through business succession planning and executive coaching. Contact us to meet with David to start building your family business succession plan today.
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