Turning Your Children Into Employees

Bringing a child into a family business can be the stuff of dreams — or nightmares. In the best-case scenario, a parent experiences the satisfaction of working alongside his hard-working, capable child to build the business together. But the process can go awry, too. Kids may not be ready for the responsibility they assume and can flounder in their jobs. They can resent being told what to do by Mom or Dad. Non-family managers and employees can also resent it when Junior joins the company, fearing that their hard work won’t be rewarded.

There is no magic formula that suits every family and every company, but families that have successfully turned children and grandchildren into employees do share some common practices. These practices help to facilitate the development of each child as a businessperson and tend to minimize the perception of unfair treatment among nonfamily managers and employees.

Be clear about your values

Best practices begin with a careful examination of family values. Most business owners — especially founders — have developed values and principles that are important to them, particularly where family employees are concerned. For example, business owners may wrestle with such questions as, should all children have an opportunity to work in the company, or will the company be more selective and seek to hire just the most promising? Does the founder or owner hope for a family enterprise led by descendants through the generations or does he have a shorter horizon in mind?

Sometimes founding values and mission statements are formalized in a written document, but if not, most families can quite easily articulate what is fundamentally important to them as a family and how that translates to their business. But it’s important to start with the essential step of self-examination. What do you want your company to do for your family, and vice versa?

Define what “family” means as applied to an employment policy

Without a definition of “family,” it is difficult for family enterprises to identify an employment policy. A clear definition of family enables the enterprise to set guidelines as to which, if any, family members can be employed: whether only direct descendants of the founders or a broader group of aunts, uncles and cousins are included as candidates for employment. Or perhaps the family prefers to limit hiring opportunities to blood relatives and make spouses ineligible for employment. Likewise, the family should consider how they feel about unmarried partners’ sharing in the family enterprise. Certainly, there is no right or wrong answer. The answers are unique to each family and firm and their circumstances, and should be driven by the thoughtful choices of the current generation based on who they are, what they believe in and the number of opportunities available in the company.

Develop a written policy

Some families choose to open employment opportunities to a broad set of constituents, not just managerial/professional-track candidates.