Benjamins & Benefits
Family-Owned Businesses need to set Clear Compensation and Benefits for Family Members and Non-Family Member.
Keeping things in the family can be a good thing, but paying the owner’s child for doing little work, no work, or bad work can create poor morale among staff members who aren’t relatives. Compensation can be a tricky topic, especially for a family business where some people may feel they are contributing more than others, but where everyone may have an equal stake in the company. It is important that salary and benefits be set according to the position and not according to the relationship.
SUGGESTIONS:
The best way to avoid resentment or feelings of entitlement is to ensure that each person's salary is based on what they would be paid in a similar position in the open market. You can quickly obtain average salary information and total compensation packages for specific jobs and roles via the web or from an HR/staffing professional.
Ensure, loyalty, experience, education, knowledge, performance, results, and many other factors influence compensation and fairness. In the end, you, the owner, must distill all this information down into what is needed, valuable to the business, and worth what compensation. The information you need to make these decisions is obtainable, so gather it, discuss it with a trusted advisor, make the best decisions you can, and revisit them as required.
Make it clear to all that there is a level playing field for rewards for good work. Dealing with entitlement is a complex and emotionally charged task. It is one where all parties need to be open to taking responsibility for their roles in creating and fostering a culture of contribution and not entitlement.
Year-end goals being accomplished are usually incented and paid with a bonus. Do not make the mistake of offering ownership for sweat equity if you can avoid it. Make sure the appropriate compensation vehicle matches what is being compensated.
Communicate clear paths to promotion based on performance. While there is a lot of "subjectivity," there is also plenty of "objectivity" for you to leverage. As an example, you may have multiple people doing the same job. Make sure all employees are clear about performance factors that lead to promotions.