Doing right by nonfamily employees

Nation's Business,  Jan, 1998  

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Family-business owners say that the greatest challenge in managing nonfamily employees is providing them with opportunities for advancement. Running almost neck and neck in second place, according to the Arthur Andersen/MassMutual American Family Business Survey '97, are the challenges of attracting new nonfamily managers, motivating them, and compensating them.

Family businesses need talented employees, from within the family and from outside. But the study, sponsored by Arthur Andersen, a professional-services organization, and Massachusetts Mutual Life Insurance Co. known as MassMutual -- The Blue Chip Company), the nation's 10th-largest life-insurance firm, hints at what many family-business owners know: Attracting and keeping nonfamily employees requires special care.

For one thing, family-business owners need to understand and respect the risks that nonfamily employees -- especially managers -- take when they join family firms. First, there's the risk that a "son or daughter or cousin could show up and be given precedence over nonfamily employees purely because of the fact that they're in the family," says Paid L. Sessions, director of the Center for Family Business at the University of New Haven in Connecticut.

There may be a financial risk, he says -- an employee might work in a family firm for many years only to be terminated at the whim of the family at a time in life when ifs difficult to make a new start. Or a disruption in the family, Sessions says, "could have an enormous negative effect on their career or their ability to do their job."

Besides recognizing the risks that nonfamily employees take, what else can owners do to manage them effectively? Sessions offers these suggestions:

* Don't make distinctions between family and nonfamily. The companies that deal with nonfamily employees successfully, he says, "are the ones that put the person best qualified to do the job in the position that they're qualified for," regardless of whether they're family. There needs, to be a clear understanding among family members, he says, "that you're not entitled to a job; you're here because you can bring something to the company."

* Understand why nonfamily employees want to work for you. While compensation is important, says Sessions, employees often are attracted by the opportunity to try things they couldn't try in a more bureaucratic organization.

* Be open about financial information. You don't have to provide every detail, but you do need to divulge -- just as public or nonfamily companies do -- all the information that managers need in order to manage," says Sessions.

* Include top nonfamily managers in strategic planning. Instead of bringing in an outside consultant to develop a plan, says Sessions, ifs better to do it internally, involving your key people. Then it becomes "enormously powerful in terms of really getting your company focused."

A well-managed family business can be a wonderful place for nonfamily employees to work. The key, suggests Sessions, is managing well.

COPYRIGHT 1998 U.S. Chamber of Commerce
COPYRIGHT 2008 Gale, Cengage Learning