Build an Employment Policy that Works

15 Jun Build an Employment Policy that Works

Family businesses can be complicated. With many egos at play and a wide array of unspoken assumptions, it’s sometimes best to get things in writing.

Enter: A formal employment policy.

Some of your family members may think of your business as their fallback career path. If they can’t find a job anywhere else, they can always work for you. That might be a great perspective for them, but it won’t be great for your business.

There are no right answers here. The trick is to create a policy and implement it consistently so no one feels they are taken advantage of. Be sure to include as much as possible in the policy, including:

What’s the purpose of this policy?

In general, an employment policy lays out all the expectations related to employment, including hiring, firing and all employee behaviour as employees of the business.

A family business may use this policy to encourage family members to join the business by pointing out the advantages of working with relatives. It may offer every interested family member a job within the business, or it may stipulate that employment will only be offered to those who have the skills and experience that are needed by the business.

Who is affected by the policy?

The employment policy may cover only those who are directly related to the owner, or it may offer a broader definition of “family,” which may include distant cousins, close friends or original investors.

Which jobs are impacted by the policy?

Depending on your business, you may have a number of different types of employees. It’s a good idea to address all types (i.e., managerial/non-managerial, full-time/part-time, seasons) in the policy, as they may be managed in different ways.

What kind of qualifications are required?

If you’re offering jobs to anyone who is related, it’s a good idea to make it clear that some roles require specific education or certification. Some jobs may require a university background, while others don’t. It may also be worthwhile requiring family members to work outside the family business for some amount of time before they can return to the family business and take over a leadership position.

Who is responsible for hiring and firing?

It can be challenging to fire your sister or your cousin, so holding family members to the same standard as non-family members can be awkward. It may be a good idea to give a non-family member the power to hire or fire a family member.

What are the expectations in terms of remuneration?

Remuneration includes not only salary but also perks and ownership shares. Family members may assume that joining the family business entitles them to all of these, so it’s important to clarify if you’re only offering a salary. If you are offering ownership shares, it may be a good idea to clarify that the family members are expected to be committed and contribute more as well.

Is there any support for education and training?

The policy could offer financial support for family members seeking to further qualifications or skills to improve their ability to contribute in the family business.

What constitutes confidentiality, and who is allowed to share information?

In a family business, it can be hard to differentiate between sharing company secrets and idle chit-chat about the workplace. It’s a good idea to remind family members of the importance of confidentiality and avoid sharing information that may not already be publicly known.

What are the expectations when it comes to relating to the media?

Create a set of guidelines to govern how family members interact with the media. It may be a good idea to require a formal announcement before any interviews to allow time for preparation.

An employment policy isn’t a once-and-done situation. After it’s formulated, review your policy regularly to be sure it adequately protects the business and the family.

To learn more about succession planning for your family business, contact us.

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.