(This article originally appeared in Succession Today by Michael Louie)
If your business hires entry-level employees, this environment may present a great opportunity for your children to learn about the family business from the ground up. Only then can they appreciate the challenges, breakthroughs and corporate goals and objectives of the business that they, one day, could own and work in. Remember to try to break the cycle of “From Shirtsleeves to Shirtsleeves” and click here to see my article.
When to start? The sooner one starts their children in the business the better. I have worked with a plumbing and HVAC crew this summer on a construction project. They had made their children part of their team throughout the summer doing jobs along with the skilled trades. This allowed the children, not only to see what their parent did during the day but it also gave their children a practical education through the summer. Most and best of all, they paid their children for their work, albeit minimum wage.
How much to pay your children? This is a fine idea but with some hazards. The maxim that I have found that works with most families is to pay appropriately for the job done. What would you pay a non-family member for the same work that the family member is doing? Then pay that family member the same amount as the non-family member. The separate form of compensation as a family member is better distinguished as dividends. This method of distinguishing salary from return on investment is important and critical to the long-term health of the business. By setting this type of policy in place, for the longer term then when there may be active and non-active family members in the family business, then there would not be any ambiguity of compensation.
Ah,the challenges of the family business.
Soon, I will give a refresher, all about communication.
Learn, think, apply.