Family Employment Policy – Purpose, Eligibility and Best Practices

Many families have an existing Family Employment Policy and sometimes it sits on a shelf until either a family member wants to work in the business or there is a performance issue with a family employee.  When is the last time your policy was reviewed and updated?

The policy is good for both the family and the business.  It gives all family members a path to become an employee of the family business.  It sets expectations and opportunities for potential employment.  The policy attempts to reduce family conflicts around employment and fairness.  It attempts to solve issues before they happen by outling how to handle all types of situations, such as eligibility, compensation, reporting structure, hiring and firing.

The employment policy helps the business by setting the expectation between the family, the family employee and their respective manager.  It aims to ensure that all employees (regardless of family ties)  are treated fairly and contribute to the success of the company.  It can contain guildlines around part-time, full-time and intership programs.

Family Employment Policy Best Practices:

  • Family members typically have between 3-5 years of experience outside the family business before coming to work at the family business.
  • Family members are subject to an application and hiring process.
  • Family members are compensated at the market rate for the job and skill level.
  • Family members should report to non-family member managers.
  • Regular performance review process, 360 degree assessment, etc. should be used to assure proper feedback.
  • As part of orientation, hired family employees and their managers read and sign the agreement as a part of training and commitment to follow the employment policy.
  • Employment policies should be reviewed and approved with HR, Executive Mgt and the Board.

What are some requirements families use “to be eligible” to work in the family business?

  • College degree
  • Outside work experience
  • Promotion through outside work experience
  • Previous experience in the company
  • Industry certification training
  • Occupational license
  • Participation in family governance opportunties
  • Second language proficiency

Setting guidelines, expectations and working on family policies are best done before an issue arises.  These sensitive issues can be the very thing that can fracture a family and upset business performance.

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