Forcing family members to earn their ownership may make them feel compelled to work for the company even when it’s not a good fit for them. These “golden handcuffs” can have a negative impact both on that individual and, because of their dissatisfaction with being there, the broader company. And when someone does choose to leave, the company’s resources may need to be diverted away from investing for growth and toward funding the buyout of their shares.
The best way to address these issues is to develop separate systems for calculating what family members receive as compensation and dividends. Compensation should be driven by merit — it should reflect the market value of the role performed. Some families pay slightly above market rates to encourage family members to work in the business; others pay slightly less to discourage them. But the core principle stands.
As they looked ahead to the next generation, it became clear that a different approach would be needed. Among their seven combined children, three worked in the business and four did not .
3. Create a family culture that recognizes the importance of both active involvement and passive shareholding.
Most of the time the best person for a manageri job won’t be a family member. Just hire someone that doesn’t have your last name 😐
So we can talk about Harvard's 'giving' roles to blacks ahead of Whites and Asians?