Compensating Family Members – The Most Sensitive of Subjects

Honestly, are you truly worth what you are getting paid?

Family member compensation is a sensitive subject and can spark up conflict quicker than almost any other single issue in a family business. Family members tend to either be undercompensated or overcompensated, rarely are they in-line with the pay scale for their position in the outside market. Family businesses carry a stigma and false perception of over paying their family members. I have found it more often is the opposite and the majority of family members are compensated below the market salary for their position. How does this happen? More…

Dangers of Poor Employee Communication in a Family Business

“We turned her down, and later found out she had approached the union, to stage the union drive, in order to win her job back.”

As family business entrepreneurs, we often tend to manage by hunch, figuring things out as we go along, especially in the earlier startup years. Many of the issues we face as our businesses grow; we plod through, without much advice from outside advisors. Surprisingly, most of the time it works out well. For our family business, this time it didn’t.

We had been in business for about 15 years, and our compensation plan was pretty basic; salary plus a holiday bonus. The bonus was pretty much automatic. One year we decided to revise the bonus portion, realizing that as longer-term employees’ compounded wages increased, it was increasing the bonus portion disproportionately. We decided to cap the bonus for the highest paid managers.

One of our long-term managers became upset with the new bonus program and decided to leave the company.

About six months later we had a group of employees, petition for a union organizing More…