Here's How to Bring Your Children into the Family Business
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Here's How to Bring Your Children into the Family Business

Here's How to Bring Your Children into the Family Business

Children should come into your business when they are ready. However, readiness is a subjective term from three perspectives:

  1. Yours, the business owner
  2. Your child's
  3. Your business'

Consider all three of these before making your decision.

Yours, the Business Owner

It should come as no surprise your perspective - the business owner - is foremost important. As the business owner, you have the freedom of control and the burden of responsibility. So if you want your child on board, feel free to make them an offer. However, if you are a bit reluctant to put on the fraternity or sorority rush, you are likely feeling the burden of responsibility to ensure you are not short-cutting your child or business.

Listen to the voice within your head which may be saying:

  • I need help. It's getting late and if my child does not come on board soon they will not have time to learn the business before I retire.
  • He's not mature enough. I don't need his personal issues complicating my business.
  • He does not have the right education.
  • She got fired from her last job. Why should I think she would be committed here?"

Whatever your concern may be, there is a string tied to all of your questions that could lead you to the "when" challenge. It’s usually difficult to separate the heart's influence on the mind, so ask for objective feedback from an advisor regarding any hesitancy to pull the trigger. Although I may not be your advisor, I am objective, so I will offer a few pointers on the infamous "when" question.

  • Don't be reluctant to promote the benefits of working in the family business. You may be competing against other opportunities which may appear more attractive to your child, so you better be ready to compete.
  • Don't fabricate a job for your child. If you do, you may open Pandora's Box leading to other fabrication requests.
  • Pay your child competitively until they prove their ability and their commitment. Then let them feel the benefits of a family-owned business.
  • Don't be your child's first full-time employer. Family members are not employees. They are Family Member Employees (FME), and they will never be treated like a common-law employee. It will be a far greater challenge for your child to manage employees if they have never been one.
  • Don't bring an immature child into a mature business. The chances they will embarrass and disappoint you are pretty high. If your child needs maturing, allow them to discover the realities of life elsewhere.
  • Don't bring a child into your business until they have a favorable employment record. Failing his or her way into the business is not a good plan for family business success.
  • Don't bring a child into the business because they cannot maintain the lifestyle you aspire for them. It's better for you to give them money than to allow your child to think your business is their personal ATM or to let your managers think the welfare of the business is not your number one priority.

Your Child's Perspective

Your child's perspective should also be important to your "when" challenge. Do not discount their emotions of feeling rushed into the commitment too early. They may feel it's the right time, or the ship has sailed and it's too late. Try to understand their feelings and incorporate their thoughts with the objective perspectives of your advisers into your decision. Don't be reluctant to challenge your child's feelings which may generate dialogue, debate, or an emotional letting. It is appropriate to have this experience in a pre-employment dialogue. The nature of the dialogue generally confirms premonition. Regardless of how your child feels, remember "when" to hire is ultimately your decision.

The Business' Perspective

Notably, there should be a job opening for which your child is compatible relative to his or her skills, knowledge, and experience. Your managers should also be prepared to train and coach your child. If your managers don't think it is a good time to be hiring your child, listen. Reciprocally, if they believe it is time to be proactive in the recruiting and hiring of your child, listen.

Hiring a child is a big deal. Their arrival creates distractions and elicits an opinion from all your employees. Most of the time, their response to "the boss' kid is on board" is not good. If you don't prepare your business for the employment of your child, gossip can spread like wildfire with such bizarre thoughts as: "The kid got fired and couldn't get another job. Now I am going to have to do my job and babysit the boss' kid. It's the beginning of the end; the boss is going to retire, and his kid is going to run this place in the ground." So have a plan and involve your management team.

A key component of the plan, which can be adopted years in advance, is a Family Member Employment Policy that stipulates the formal criteria and process for employment in the business. By involving your managers in the process, you will send a reassuring message that you are not going to burden them with babysitting.

Be mindful there is a difference between an FME and a successor. Let your managers and key employees know well in advance you are developing a plan for your child and ask their input in helping develop a plan not only for employment but also for successor development. Involving your managers in the creation of a Successor Development Program reassures them you are not going to turn the company over to a nincompoop. Communicate employment plans to your children as soon as they graduate from high school, so they understand the family business is serious business, not an opportunity to ride the coattails of their parents or siblings. Communicate the Successor Development Program after your child distinguishes themselves in your business as a role model for commitment, effort, and enthusiasm.

Recognize, when you are hiring a child, you are bringing in a new role model for behavior and attitude. So be very explicit with your child as to what you expect. Ideally, you would also adopt Family Member Employee Performance Expectations. Don't let your child make assumptions regarding expectations or make up their own rules. Most importantly, do not supervise your child or allow another family member to do so. Find a mentor and always meet with your child's direct report and express to them not to give your child special treatment. Of course they will give them special treatment, but by meeting with them, they will feel more empowered to hold your child accountable to the employee handbook and their personal standards of performance, which are critical to training and development.

Loyd H. Rawls, Founder and Chairman of The Rawls Group, has specialized in succession planning since 1973. Well respected in his field, Mr. Rawls is a highly requested speaker and has published numerous publications on this subject such as “Seeking Succession: How to Continue the Family Business Legacy.” “The Succession Bridge: Key Manager Succession Alternatives for Family Owned Businesses,” “Estate Planning Heartburn Relief,” and “Family Business Heartburn Relief.” For more information visit seekingsuccession.com.   

Published: November 14th, 2022

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