Effective and successful businesses exist because they have the right people in the right places doing the job for which they are best suited. When family businesses transition it is an opportunity to optimise this principle.
The whole question of the role and position which family members play within a business can easily become a political and family nightmare. Who gets what position and how much they are remunerated are challenges that have long pulled family businesses apart.
Some families have sought to address these potential areas of conflict by remunerating everyone at the same level but that in itself creates an inequity and conflict. And, importantly, can reduce business performance with the most capable family members stepping away as they do not believe their remuneration is fair.
When it comes to areas where conflict is likely, the best approach is to commence by establishing principles and then applying them.
In this manner, you can more readily gain a consensus around a principle as it is not directed at any individual. And then seek to manage the outcome should someone be unsatisfied, as the reasoning is clear and transparent through the established principle.
In the case of a ‘place for everyone and everyone in their right place’, the starting point is the creation of a strategic business plan for the next growth stage of the business.
That is, moving forward into transition with the incumbents stepping back and the new generation stepping forward. The creation of a strategic business plan will also incorporate the redesign of how your organisation works and the various roles and positions. From this point, you know what positions there are to be filled for the future and are not simply mirroring what has been in the past.
Some examples of principles for finding the right job for family members:
- All positions are considered vacant and open to being filled.
- The creation of clearly defined position descriptions, including role, responsibility, accountability and expected performance.
- All positions are remunerated at competitive market value, including bonuses (if the market generally pays such).
- No restricted positions, meaning a non-family member can fill any role if they are best qualified.
- Note: Sometimes families believe roles, such as that of CEO, should only be held by a family member, but if there are no suitably qualified family members you may be placing the future business at risk.
- Allow family members to consider what role they would like to undertake in the family business, and to submit for that role.
- For senior roles, a selection committee including independents will interview and recommend a preferred candidate.
In the longer term, undertaking all business appointments on the basis of merit will underpin family unity and a successful business.
Active Knowledge Questions:
- How do you decide who gets what role and what they are paid?
- Is it based on merit or preferential treatment?
Act Now
Searching for the world’s best family business succession guide? Buy Transition – Orienteering The Five Lands of Succession.
Want to become a part of the Entrepreneurs+ community? Sign up for my eNewsletter, and join the conversation by sending a question via Ask Richard.
All the best in the success of your business,
Richard Shrapnel
