Even if your family business is a model of harmony, it’s a good idea to think about how you’ll deal with conflicts before they arise.
“There comes a time when there is not enough jobs for everyone in the family. Oftentimes, professionals may even be better in running the day to day operations,” Lance said.
However, at a forum at the Ateneo Family Business Development Center last March 2012 (posted by Coco Alcuaz, ANC, www.abs-cbnnews.com) heads of some of the country’s biggest family-controlled corporations such as Jaime Augusto Zobel, Josephine Gotianun-Yap and Martin Lorenzo, reminded the audience that their kids are one of their biggest assets. Filinvest’s Gotianun-Yap said: “The third generation is an excellent human resource pool. Where else can you find a group of people who have the same values… you have the benefit of a very long training period. There is already a built-in loyalty and pride in the business.”
Yet, employment of family members remains one of the biggest issues in family businesses. To address this, there should be a family hiring and employment guidelines which clearly states that employment depends on qualifications, not birthright, and all those who are interested in pursuing a career in the family business must be familiar with the business — how it’s run and operated. For example, one of the ways this can be accomplished is to attend the company’s business and board meetings. Younger family members can also gain understanding of the business through summer jobs, and part-time employment.
Parents can’t take training for granted — from early indoctrination in the values of thrift and work to internships, jobs outside the family business, and first jobs in the family business. Martin Lorenzo of The Pancake House group said neglecting this can result in failure.
“Sometimes this is because family businesses put in their children too early, not because they’re not capable or not competent. They are, but not yet ready. So my belief is they should work outside, learn and get their stripes outside first and once they learn especially from the mistakes of others, that’s the time they come back into the business,” he said.
For his part, Zobel de Ayala said, “our rule, if you want to work permanently for the company, you have to work independently.”
But working outside could mean working abroad, which throws up a new problem: how to get back these OFWs to come back to a Philippine-scale salary.
Gotianun-Yap said the family may have to pay the returning kid what non-family members at his level get paid, and make up the difference from its own pocket until he or she is a top executive with top pay.
“What makes it difficult these days is the retiring OFWs. Many families find they can no longer match the compensation their third generation is receiving abroad. They might find themselves unable to attract the very talent they have trained and educated,” she said.
The interested family member may undergo an internship program to learn, experience and get training in various job levels. Time frame may be six months minimum and one year maximum. Requirements for completing internships: attendance at quarterly meetings; attendance at relevant business meetings; and
participation in an assessment to outline strengths and areas for development. At the end of the period, the intern may be offered a job, get an extension of the internship period for further training or choose to pursue another career if he/she wants to. Compensation will be established and maintained at levels comparable to non-family employees having similar responsibilities and experiences.
It should likewise be emphasized that positions will not be created solely for the purpose of employing family members unless there is a business justification for doing so. Each family member has the responsibility to adhere to the behavior and performance standards established by the company and the family. They should strive to set the example in their positions.
Strategic guidelines
• Create a formal, written policy that governs family participation in the business. Specify a decision-making process, succession rules, salary and equity guidelines, dispute resolution, and other vital points. Don’t rely entirely on lawyers or other outsiders to set a family policy — the process of creating such a document within the family is just as important as the end result. This is not meant to be a legal document, but rather a reflection of the family’s shared ethics and business culture.
• Performance evaluations aren’t just important in a family business — they’re essential. But they’re also a major source of hurt feelings and family conflict. Develop a formal, structured evaluation process that everyone understands and accepts. Focus on improving family members’ work performance rather than simply pointing out their flaws and weaknesses. Family members who do not meet the standards of performance and conduct required of non-family members in similar positions should be considered for termination, with due process.
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Prof. Soriano is the chairperson of the Marketing Cluster of the Ateneo Graduate School of Business. He is also a Senior Consultant of Wong+Bernstein Business Advisory Group. For comments, send email at [email protected]
