Wednesday, September 23, 2015
A Paraphrased Parable
From Luke 11:15 – 32
There once was a Father who had a very successful Family Business. This man had two sons, both of whom worked in the business. One day the youngest came to his Dad and stated that he believed that as a family member and as a key executive, he was worth more than he was being paid and therefore he wanted his share of the business now. He stated that as a family member, it was due him.
So Dad obliged, utilized the Line of Credit, and paid the youngest son. With his newfound fortune this young man traveled the world and lived a life of extravagance and leisure. Within a relatively short period of time, this young man spent the money he had been paid and found himself destitute in a country several continents away.
With no money and no place to live this young man took a job as a common laborer earning barely enough to keep a roof over his head. After telling his new boss he was worth much more than he was being paid, this new boss terminated his employment. Now this young man had no job, no place to stay, and hardly anything to eat. Realizing the staff and employees at his Father’s business had lodging and food and all their needs met, he decided to return to where he came from and seek employment back at his Father’s Business.
After manipulating his way back into the country and attempting to hitch hike from the airport back home, the police detained him. Because of the stature his Father had in the community, the Chief of Police contacted the Father and advised him of the situation. Dad, instead of sending the chauffer to pick the son up, went to the clothing store and bought his son a new suit and picked him up from the station and said, ‘Let’s go home son, we are going to have a party’.
Many CEOs of Family Businesses are not aware of what is best for their children and heirs. Frequently they guess at what to pay and blur the lines between their roles as an employer and their role as a parent. As a parent it is common to confuse a paycheck with a return on ownership and the emotion of wanting to provide the ‘best’ for your children. Unfortunately many children enter the family business with a sense of Give Me, Give Me, an attitude of entitlement that was nurtured at an early age. Begin at an early age of fair pay for work and a Compensation Policy that everyone in the Firm, both family and non-family, understand and abide by.
Our Business Compensation plan is Market Based and applies to Family members.
1. We have a written compensation plan for our business.
2. We have a written compensation plan for our family.
3. Compensation for family employees is based on their job classification.
4. We have accurate Job Expectations for each position.
5. Our business conducts annual compensation audits.
6. Our business subscribes to compensation surveys for our industry and within our locale.
7. We clearly communicate our family compensation plan to each family member.
8. There is Deferred Compensation plan for our key Executives and Officers.
9. All family members on ‘payroll’ are actively contributing to the success of the business.
10. We have a Compensation Committee that includes non-family.
11. We clearly communicate our business compensation plan to each non-family employee.
12. Salary increases and bonuses are made only when we are profitable.
13. Non-Family employees have the same ability to utilize company assets or resources, such as vehicles etc., as do family employees.
14. There is a process in place if an employee, family or non-family, does not agree with their compensation.
15. Our business conducts annual performance review discussions with each employee, family and non-family.
16. Additional perks are equally available to all employees in the appropriate tiers or categories – both family and non-family.
17. Non-Family and family employees are compensated in the same manner.
18. Family employees are expected to live within or below their financial means.
19. Our compensation structure contributes to building the self-confidence of each individual.
20. Our compensation and its structure is considered a strategic element of our overall business plan.
Incentives should be large enough to provide an occasion for celebrating success but not so large as to distort behavior. And incentives can include recognition and things other than money. Companies get themselves into trouble all the time by being too clever with their incentives.