Make an employment policy and contract for your family that outlines expectations, job descriptions, compensation, performance evaluation, exit strategy, and chain of command.  No one, including your children, likes to be out of the loop and unsure of their employment terms.

Recognize your child’s hard work, just like you would for any other employee. 

Entitled.  Spoiled.  Arrogant.  If a founder is paying their children more than the fair market salary, they are fostering these characteristics.  And who wants that?   The responsibility of a parent is to raise independent and responsible children, but if they grow up with everything given to them on a silver platter, this won’t happen.  If you reward an entitled attitude, you will get more of it and less enthusiasm from your management team.

Employment in, or ownership of, the family business is NOT a birthright.  It must be earned.  It must be deserved.  It must be worked for.  It must be desired.  It must be requested.  It must be merited.   If it is none of these and you still hire one of your kids, you may be mismanaging a gift and risking what you spent a lifetime building.

Even if you’ve identified an important job that must be done, your son or daughter must be skilled and interested in that area or it will not be done well.  If your child is talented in areas that are not needed in your company, send them somewhere else.  Don’t waste their talent on your firm and your company resources paying a salary just because you’ve always dreamed they would work for you.  They will be much happier in an environment that is suited to their skills.  Let him or her grow on someone else’s payroll.  They may eventually come back trained and enthusiastic.

*NOTE:  While it is important to provide meaningful work that matches their skills, this cartoon does highlight the importance of earning responsibility (the next blog will address this issue).

Don’t waste your resources on pointless employment.  If there is no real or meaningful tasks for your child, wait until one comes available or give them a new project or task.  Consider challenging your children by putting them in charge of the philanthropic leg of your company.  Have them establish a foundation, define its giving parameters, and make connections in the community.  Whatever the role, ensure your child is given a real job, with real objectives and deadlines, not an executive sandbox.

Completing post-secondary education requires determination and helps develop critical thinking.  Most other businesses would require your son or daughter to have completed post-secondary education nowadays.  Why shouldn’t you expect the same?

The challenges and struggles that “mom and pop shops” have faced since the introduction of big box stores in the 1980s is no small feat.  Even if your family business is larger or unaffected by the economies of scale advantage that larger businesses have, every business must seek to establish professionalism in our society which has high expectations and demands quality.  Good enough is not good enough.

The key is to give your customers superior value and they will keep coming back for more.

Value is defined by a perceived relationship between price, quality, and customer experience.  The relationship between price and quality is up to you but a positive customer experience is something that no business should ever sacrifice.  “The cost of getting a new customer is much greater than the cost of keeping an existing one,” so work hard at impressing your clients (David Bork)!  People always remember a great “experience” so work at giving them one.

The most successful companies have found means of providing stable and fulfilling work for their employees.  They understand what makes their employees “tick,” how to use their skills effectively, appreciate them regularly, and provide motivation to succeed.  If you think the bi-weekly pay cheque is enough to motivate and retain employees, think again.

Of course, there are numerous challenges with this task:  personality variations, team dynamics, business demands, generational differences, or even the owner’s and manager’s lack of skills required to appreciate and motivate employees.  No owner should feel like it is his or her responsibility to do this for every staff member if the company is much more than approximately five employees.  This is where strategizing with other company leaders and management becomes important.  If the owner can appreciate his leadership team, coach them in this task of motivating employees, and also ensure he or she is well trained in this area if it doesn’t come naturally, than the owner will have done their responsibility.  Make sure your team understands your vision and passion.  If they catch it, they will pass it on.

Happy and motivated employees will work hard for the business.  The effort is always worth it.

The prosperity of the business will determine the prosperity and health of the family.  So what does it take to prosper the business?

Bottom line—focus on profitability.

Granted, there are many factors that affect profitability and there are other aspects of business, such as corporate social responsibility that also rightly demand our attention.  However, making a profit through low costs and successful sales is what distinguishes a business from a nonprofit organization or a charity.  As a business, don’t become distracted by family matters, but instead, aim for high profits and aggressively seek to reduce waist and inefficiencies.   Inadvertently, if the business is succeeding, judgments and criticism among family members will decrease.  Treat the business like a business and the family like a family and success, instead of confusion, will follow.

Stay focused on profit.  Seek efficiency.   And make both your business and your family prosper.