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…

Going Outside – The Runaway Manager

“Before we knew it, we learned that we were having a Grand Opening for our new Manhattan retail store later that week. And we weren’t even a retailer“

To help with the growth our family business, our family hired a key non-family manager for the first time.  Attracting an outside manager into a family business is especially challenging with regards to compensation.  Like many closely-held firms, we weren’t willing to give up equity in the business, so we created a compensation package built around a performance bonus.  We selected an outside executive who came from a larger company, who brought proven expertise to grow our company rapidly. Coupled with their high ambition, it seemed like a good idea to tie their compensation into sales growth. More…