Having a family business plan in place is very important. Even though it is a difficult task, families must prepare for the challenge of dealing with the death of a family member who is a key to the family business. The death of a founder or key executive in a family business is a very difficult situation, but a family business must prepare for such a situation.
Family business policies should include periodic and scheduled performance evaluations. A performance evaluation presents an opportunity to discuss quality of contribution, work habits, professional growth, demeanor and attitude within the business and with customers. Family members set the standard for the company and their behavior must be a leading example for all employees.
Family business compensation is something that should be addressed within a family business's employment policies. Family members must understand that they will be paid fairly, at fair market rate, for the position they hold. This avoids a family member from obtaining an inflated view of their contribution to the family business.
A family employment policy should address what is necessary for a family member to enter into the business. Following specific pre-determined guidelines will help a business hire competent employee who will make a positive contribution to the business. It's important to remember that a job in the family business is not a birthright.
Every family business should establish a set of family business rules. These rules of engagement should encompass a policy that states how family members will be allowed to participate in the family business. The purpose of family business rules is to guide the business, and it's important to develop a written employment policy long before it is needed.
The hiring of family members is not something that should be taken lightly by any family business. Family members should be required to work for a company not associated with the family business, and gain experience and be successful in that position, before being hired into the family business.
The premise of a family business and the premise of a family are not the same. Because the foundation for acceptance in the family is different from the business, there is a fundamental disconnect between the two systems that many people do not recognize. No business will be successful if the leadership is not competent.
In family business, there is a clearly defined but invisible control mechanism called the family system. This system is often referred to as the family business psychology. In family business, the keys to implementing solutions to business problems are often locked up in the psychology of the family. Business solutions cannot be effective if family business psychology is ignored.
A corporate governance structure is a collection of customs and policies that affect the way a corporation is administered. This type of structure provides an internal discipline on how family and non-family members function within the business. A corporate governance structure helps professionalize the way a family business operates.
Succession in family business is all about the survival of the business as an economic entity. Succession planning should involve the whole family, whose goal should be enabling the business to grow and prosper for the family’s benefit. The current leaders, who may have started the business, must learn to let go of control.
