Family and business makes for a complex mix, essentially because of conflict of interest. At any time, those involved wear a mix of ‘hats': family, owner and employee. This sometimes makes decision making very difficult: what comes first – family or business? Do we give family members a job even if they don't deserve it? What if they aren't performing? How much do we pay them? At the appropriate time, do we gift the business to them, sell it to them, or just sell it for cash?
Depending on which 'hat' you are wearing, you may have very different answers to these and many other questions relating to the family business.
While it's very hard to separate these parts of ourselves – for example it's hard to just be the the boss and fire a family member who isn't performing – we can maintain an awareness of the spill over effects to the others hats we wear, and to the family at large.
When approaching these complex decisions, it can be helpful to consider what they would be wearing each separate hat, and then weigh up which hat is most relevant, and the wider implications of the decision. Having externals at the decision table can help clarify which hat are influencing decisions, as family members are highly subjective.
Consider This: Does your family have policies regarding family members and any operating assets? Do family members have to pass a bar to gain employment? Are they paid market salaries? Do you account for the increase in value created by some family members working in the business?
The original article was published in Family Busines Succession Planning - David Werdiger
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A successful family advisor, business strategist, entrepreneur, and thought leader with a proven track record of achievement in driving innovation and growth for entrepreneurial endeavours and not-for-profit organisations.
David's experience includes founding and building multiple businesses from the ground up, and expanding and leading operations into new markets. He is recognised by colleagues as a creative problem-solver and strategist with expertise in coming up with ideas and creating new ways of improving business, strategy, operations, and results.
As a business and family advisor, he provides clients with expert business advice on intergenerational business and wealth transition, advancing entrepreneurial efforts, setting up good governance, improving financial and operational results, and strategic direction. He is also a seasoned program leader with an aptitude for providing governance in corporate and philanthropic pursuits with a strong focus on culturally focused non-profits.