Legal Blog

Three Surefire Strategies to Incentivize Family Member Employees

shutterstock_407848000“What can I do to better motivate my employees?”

 

“How much should I pay my family members who work for my business?”

 

Family business owners often ask these two questions in the same breath. And although both considerations relate to incentives, the employee engagement equation is not a simple one, especially in regards to the youngest generation in the workforce.

 

According to a PwC study, which surveyed thousands of millennials, pay is a weaker motivator than opportunities for career progression, and a company’s impact and purpose are key differentiators. Essentially, the 20–30-year-olds in your family business—the people who may eventually take charge of the organization—want to know that their work matters.

 

Older generations are not terribly different. We all want to believe that our jobs make a positive impact in the lives of others, or at least we want to feel a sense of personal satisfaction in our work. Compensation is important, but it’s only one factor in a holistic picture of an employee’s satisfaction, and there are drawbacks to placing too much emphasis on pay.

 

For a family business owner, this may or may not come as good news. It may be a relief to learn that tension between family members working at the same company does not always stem from money, or that a disengaged child, grandchild, niece, or nephew is not necessarily hoping for a higher salary. In the context of a family business, however, where relationships extend far beyond the workplace, you may need to act with a high degree of sensitivity in addressing underlying performance issues. When money cannot solve the problem, difficult conversations may lie ahead.

 

Fortunately, several strategies can lend shape to a deeper involvement in your family member employees’ continued happiness at work:

Mentoring

Establish mentoring relationships between newer hires with more senior employees, and both parties are likely to benefit. Protégés learn the business’s unique culture, value system, and ways of operating directly from an individual they trust, rather than solely from a handbook. Mentors, meanwhile, are exposed to questions they would otherwise take for granted about the business, are introduced to new methodologies and technologies, see their roles in a new light, and can bring these insights back to company leadership.

 

Because of the often-complex nature of family dynamics, mentoring relationships should be examined carefully before mentors are assigned. Partnering siblings who are very close to each other may have adverse consequences if one or both of the two do not take the mentorship seriously. In some cases, it may be a better idea to match up family members—such as an uncle and a niece, or an older cousin and a younger cousin—who have a less established relationship outside of work, so that both individuals are able to view each other with as little bias as possible and take advantage of the room to grow their partnership.

Recognition and Involvement

Regardless of role, every employee in your family business deserves a degree of recognition and a sense of involvement in the organization’s future. Make sure to acknowledge employees’ achievements in front of others, as well as in private. Leadership should meet with every member of the organization individually to discuss performance and goals. At these meetings, discuss recent projects in detail, reiterate the company’s mission, and ask employees about their personal thoughts about and objectives for their work: What do they like about their jobs? What doesn’t make sense or could be improved.

 

Take these ideas into consideration, and most importantly, thank employees when their feedback is put into practice. In family businesses, where generational succession is often an assumed fact and individual accomplishments are considered in terms of broader continuity of success, small moments of recognition go a long way.

Flexibility

Consider allowing your family members the option to work from home, lower (or no) hourly requirements, and more (or unlimited) time off. As more companies do away with these conventional workplace restrictions and prioritize deliverable outcomes instead, family businesses have a lot to gain.

 

Employees who sacrifice free time to meet unnecessary hourly minimums may assume that their physical presence in the workplace matters more than the results of their work, and start to trivialize their job or grow to resent the business. By offering employees greater flexibility, you are communicating that you trust them to work in the best interests of their business—rather than for a manager or supervisor—thereby deepening their personal stake in the business overall, and mitigating long-lasting conflicts between individual family members.

 

In forthcoming installments of this series about family businesses, I will further explore this topic by discussing succession planning and how to develop next generation leaders. Until then, you can find more family business guidance on the Offit Kurman blog.

 

And if you are located in the Baltimore or Frederick areas, consider joining the Family Business Roundtable—a monthly meeting that brings together family businesses in your area to exchange worthwhile ideas and useful advice. Click here to learn more.

ABOUT MICHAEL N. MERCURIO

Michael Mercurio Casual-SmallBusiness attorney and M&A lawyer Michael N. Mercurio serves as outside general counsel on matters related to business law, M&A, and real estate law. As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on all aspects of business and commerce, with a core specialty in mergers and acquisitions—both from the sell side perspective and buy-side perspective.

 

 

 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 135 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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