Family Employment Policies, Part II: The Rules of Entry

Family employment policies should base hiring on several criteria:

Age.   Most sources support exposure of youngsters to the business through summer jobs in high school, but discourage immediate entry after high school or college.

Phil Sidwell, a 20-year veteran in family business consulting, believes that a 21-year-old generally does not have sufficient maturity to handle the family dynamics and business stressors in a family-owned business. Some advisors suggest that age limits will encourage long-term commitment, rather than providing a security blanket if all else fails. 

Experience.  Experience is generally more accepted as a criterion for family business entry than any specific educational base.

Sybil Ferguson, the founder of The Diet Center, involved many family members in her business. Her 20/20 hindsight makes her appreciate the value of working elsewhere for a minimum of two years before joining the family business.

John Ward, John Davis and David Bork, along with many other prominent family business experts, believe three to five years of experience outside the family business is essential. Bork is more specific.  He likes family members to work outside the family business for three to five years in one or more jobs requiring competence, skill and sustained performance, with at least one job having lasted two years or more.  The family candidate also must have earned at least one promotion in their outside job.

These experience criteria help individuals develop competence and confidence, and benefit the family business through the enhanced contribution the new family employee can make. This contribution is even greater if the family member worked for a business larger than the family business and learned more sophisticated strategies to share with the family.

Education.  The education required by the family business should be based on the needs of the business. Although many experts recommend a college education, many others suggest that this may be a family value, rather than a business need.

If the business requires a well-trained professional such as an accountant, attorney or engineer, obviously a family member will need the appropriate degrees, certificates and licensing to fill such positions.

On the other hand, an over-trained employee can create morale problems. For instance, gratifying opportunities for an attorney in a $2 million plumbing equipment company would be limited. Sidwell believes appropriate training or educational experience can be found in areas other than college: the military, technical training and/or a structured professional training program in another company.

Commitment. Again, the size, values of the family, and the marketplace should dictate how the employment policy should address this criterion.

For instance, part-time employment can address family needs (e.g., a parent who wants to be at home with children), but at some point in the development of the business, professionalism and full-time commitment may be necessary to reach new levels of profitability and competitiveness.

Some companies develop a multiple-track family employment model. One track might allow youngsters or new in-laws to “sample” the family business to determine long-range career interests.

A leadership track would spell out specific criteria for membership (e.g., education requirements, apprenticeships, experience within and outside the business, etc.) and include a clear plan of development and progression within the firm. Obviously, mutual commitment in this track should exist.

A third track would be for family employees who have skills that the company could use, but who may be neither interested in nor capable of leadership. An example of someone on this path is the son’s wife who has worked outside of the business as a secretary. She would like to work in the family business to feel more connected to the family and involved in her husband’s life. The company can benefit from her clerical support as well as her high investment in the success of the company.

Other considerations for policy are whether family members who leave the business are eligible for rehire and under what conditions (e.g., leave for pregnancy or education vs. quitting over family conflict).

The issue of commitment is connected to the question of what position a family member is chosen to fill. Most advisors to family businesses warn against creating unnecessary positions just to employ a family member, which can create resentment among other employees.  It also undermines the family employee’s self-esteem.

The conventional wisdom is to only offer a position that meets a need in the organization to a candidate who is clearly qualified. A partial exception to that rule is the apprenticeship of a successor who may move from position to position to learn many aspects of the business.

Even then, the family employee’s credibility and acceptance will be enhanced if he or she is making an obvious contribution to the firm. Another exception is creating a position for a family member who has worked as a specialist elsewhere and who can advance the firm’s interests in a custom-made job.

A Human Resources manager can offer important perspective and help in placing family members in the business. HR professionals have many tools for assessing potential employees’ strengths and skills and matching these with appropriate employment. 

In recent years, assessment tools have improved greatly in their ability to identify a person’s core traits, which in turn predict the mix of competencies the person will naturally have or be able to develop given the right opportunities. 

Effective assessments can heighten the accuracy of placing the person in the right position. They also identify the at-risk patterns that might derail a person’s success and offer coping methods for prevention.

Assessments can identify who family members are at the core, helping point them in career directions full of meaning and joy, not hollow success at the price of happiness. 

Family Employment Policies may not make everyone happy, but when applied consistently, present across the board fairness with which no one can argue.