Are you ready to bring the next generation into the family business?

Bringing children into the family business can be challenging and rewarding — a topic we discussed in the February 2015 meeting of the Women in Family Business Peer Group at the Conway Center for Family Business.

Here are some tips to streamline the process:

When and criteria

  • At an early age, show them that the family business is a positive thing, not just something to be complained about at the dinner table. Share the joys in your business as well as the complaints.
  • While in school, they should do some sort of job in the business and be compensated so they see some benefit or reward for working in the family business. Watch for passion — what are they interested in? What positions or tasks do they gravitate toward?
  • After graduating from high school they can still work, but you need to decide if they must meet minimum requirements to actually join the business. For some family businesses, children must have a college degree or have worked outside the family business for x number of years. Think about what criteria you want to establish for your family business and then implement it fairly.

Compensation

  • Fair compensation is important: no penalty for being a family member, but also no reward.
  • Pay for performance as you would any other non-family employee.
  • Do not play “someday this will all be yours”…

Expectations

  • Discuss expectations early and often. They need to know what they are getting into and what they need to do to succeed. This includes managing “name recognition” and how their actions — professionally and personally — reflect on the family business.
  • Family council meetings should be held before bringing children into the business.
  • Have a plan.

More Tips

  • Have buy-sell agreements in place. They must contain language that allows the owner/founder to “fire” the next generation if they do not meet expectations, even if you think your little “sweetheart” would never let you down!
  • Use first names in the office — not Mom and Dad or other endearments.

Until next time,

Bea Wolper