Employing non-family members in a family business
Produced in partnership with Douglas Streatfeild-James and Caroline Hardwood of Burges Salmon and Nicholas Smith of the Family Business Consultancy
Employing non-family members in a family business

The following Private Client guidance note Produced in partnership with Douglas Streatfeild-James and Caroline Hardwood of Burges Salmon and Nicholas Smith of the Family Business Consultancy provides comprehensive and up to date legal information covering:

  • Employing non-family members in a family business
  • Family business culture
  • Financial rewards
  • Non-financial incentives
  • Ownership
  • Equity
  • Issues to consider
  • The importance of exit
  • Choosing the plan
  • The family wishes to exit—Employee Ownership Trusts and management buy outs

Family business culture

With the typical average cost of replacing an employee exceeding £30,000, recruiting and retaining the right people with the right skill set is key to any company, but is especially important to a family business because recruitment can be harder than for their competitors. There are advantages to working for a family business: studies have shown increased levels of loyalty, job satisfaction, flexibility and job security. However, there can be disadvantages too, including lack of clarity, a perception of nepotism, confused delegation, cultural ambiguity and family politics. The challenge for any family business is to recruit senior managers with the right cultural fit and ensure they are incentivised to stay and build the business.

It is, therefore, vital for a family business to make sure that the recruitment and induction policies recognise the unique culture and complexity of the family business concerned. Square corporate manager pegs will not fit into round family business holes. It may well be that the most qualified candidate might not be as good a cultural fit as other candidates with less stellar CVs, but a strong track record in operating in a family firm environment.

It might also be appropriate to consider training for non-family managers in family business theory to help them understand the dynamics in which they are operating, which are

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