{"id":645,"date":"2017-10-09T09:21:06","date_gmt":"2017-10-09T09:21:06","guid":{"rendered":"http:\/\/blogs.isb.edu\/centre-for-family-enterprise\/?p=645"},"modified":"2025-12-31T09:40:09","modified_gmt":"2025-12-31T09:40:09","slug":"using-employment-plans-to-prevent-succession-setbacks-in-a-family-business","status":"publish","type":"post","link":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/","title":{"rendered":"Using Employment Plans to Prevent Succession Setbacks in a Family Business"},"content":{"rendered":"

It’s our belief that a significant percentage of family business failures are a byproduct of families and their advisers having given comparatively much less attention to the antecedent imperative to succession planning- employment planning. Without thoughtful employment planning, families increase the risk of succession planning failures for a variety of reasons, including the possibility that potentially qualified successors a) won\u2019t be attracted to work in the family business; b) get frustrated and leave or c) won\u2019t be trusted by family members.<\/p>\n

To reduce the risk of these and other related challenges, families in business together should develop an employment plan. While every such plan must be customized to fit a family\u2019s unique constituency and circumstances, we have found that most thoughtful plans share the following components:<\/p>\n

    \n
  1. Eligibility criteria: Families are well served by establishing \u2014 and adhering to \u2014 clear criteria that must be met or exceeded for members to be eligible to work in their business. Such criteria traditionally include a certain level of formal education and a requirement to gain experience by working outside the family business for a period of time.<\/li>\n
  2. A compensation methodology: A methodology for how family members who go to work, and remain employed, in the business will be rationally compensated is key. Good compensation plans tend to set a family employee\u2019s compensation on the basis of fair market value (what would the family pay a non-family member?) and seek to align compensation with both individual and organizational goals as well as the organization\u2019s and family\u2019s values and culture.<\/li>\n
  3. Performance evaluation: While thoughtfully setting compensation is important, no less important is adjusting compensation based on relevant criteria. While a company\u2019s overall performance and market conditions need, of course, to be considered, perhaps the most important criteria are based on fairly evaluating an individual\u2019s job performance. Tracking performance evaluations over time can be particularly helpful when considering whether an individual is ready to be considered a successor.<\/li>\n<\/ol>\n

    Without rationally constructed employment plans, families in business together increase their risk of destructive conflict for a variety of reasons. For example, incumbent leaders, particularly founders, might feel that no one is demonstrably capable of succeeding him or her; or founders might feel that a junior generation family member is qualified to take over the business simply by virtue of being from the same gene pool.<\/p>\n

    Source: Friedman, Scott., Forbes, October 4, 2017; <\/em>https:\/\/www.forbes.com\/sites\/forbescoachescouncil\/2017\/10\/04\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/#5c7f242451a1<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    It’s our belief that a significant percentage of family business failures are a byproduct of families and their advisers having given comparatively much less attention to the antecedent imperative to succession planning- employment planning. Without thoughtful employment planning, families increase the risk of succession planning failures for a variety of reasons, including the possibility that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false},"categories":[2],"tags":[],"yoast_head":"\nUsing Employment Plans to Prevent Succession Setbacks in a Family Business - Thomas Schmidheiny Centre for Family Enterprise<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Using Employment Plans to Prevent Succession Setbacks in a Family Business - Thomas Schmidheiny Centre for Family Enterprise\" \/>\n<meta property=\"og:description\" content=\"It’s our belief that a significant percentage of family business failures are a byproduct of families and their advisers having given comparatively much less attention to the antecedent imperative to succession planning- employment planning. Without thoughtful employment planning, families increase the risk of succession planning failures for a variety of reasons, including the possibility that […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/\" \/>\n<meta property=\"og:site_name\" content=\"Thomas Schmidheiny Centre for Family Enterprise\" \/>\n<meta property=\"article:published_time\" content=\"2017-10-09T09:21:06+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-12-31T09:40:09+00:00\" \/>\n<meta name=\"author\" content=\"Editorial team\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Editorial team\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/\",\"url\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/\",\"name\":\"Using Employment Plans to Prevent Succession Setbacks in a Family Business - Thomas Schmidheiny Centre for Family Enterprise\",\"isPartOf\":{\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#website\"},\"datePublished\":\"2017-10-09T09:21:06+00:00\",\"dateModified\":\"2025-12-31T09:40:09+00:00\",\"author\":{\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#\/schema\/person\/36b0b1fce0228ee6b0380926861571cc\"},\"breadcrumb\":{\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Using Employment Plans to Prevent Succession Setbacks in a Family Business\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#website\",\"url\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/\",\"name\":\"Thomas Schmidheiny Centre for Family Enterprise\",\"description\":\"Creating value for families and businesses through research and innovation\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#\/schema\/person\/36b0b1fce0228ee6b0380926861571cc\",\"name\":\"Editorial team\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/20fb226145337a9ce5d93494a13b2d55?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/20fb226145337a9ce5d93494a13b2d55?s=96&d=mm&r=g\",\"caption\":\"Editorial team\"},\"sameAs\":[\"https:\/\/blogs.isb.edu\"],\"url\":\"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/author\/isb_blog_user_admin\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Using Employment Plans to Prevent Succession Setbacks in a Family Business - Thomas Schmidheiny Centre for Family Enterprise","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/","og_locale":"en_US","og_type":"article","og_title":"Using Employment Plans to Prevent Succession Setbacks in a Family Business - Thomas Schmidheiny Centre for Family Enterprise","og_description":"It’s our belief that a significant percentage of family business failures are a byproduct of families and their advisers having given comparatively much less attention to the antecedent imperative to succession planning- employment planning. Without thoughtful employment planning, families increase the risk of succession planning failures for a variety of reasons, including the possibility that […]","og_url":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/","og_site_name":"Thomas Schmidheiny Centre for Family Enterprise","article_published_time":"2017-10-09T09:21:06+00:00","article_modified_time":"2025-12-31T09:40:09+00:00","author":"Editorial team","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Editorial team","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/","url":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/","name":"Using Employment Plans to Prevent Succession Setbacks in a Family Business - Thomas Schmidheiny Centre for Family Enterprise","isPartOf":{"@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#website"},"datePublished":"2017-10-09T09:21:06+00:00","dateModified":"2025-12-31T09:40:09+00:00","author":{"@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#\/schema\/person\/36b0b1fce0228ee6b0380926861571cc"},"breadcrumb":{"@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/2017\/10\/09\/using-employment-plans-to-prevent-succession-setbacks-in-a-family-business\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/"},{"@type":"ListItem","position":2,"name":"Using Employment Plans to Prevent Succession Setbacks in a Family Business"}]},{"@type":"WebSite","@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#website","url":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/","name":"Thomas Schmidheiny Centre for Family Enterprise","description":"Creating value for families and businesses through research and innovation","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#\/schema\/person\/36b0b1fce0228ee6b0380926861571cc","name":"Editorial team","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/20fb226145337a9ce5d93494a13b2d55?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/20fb226145337a9ce5d93494a13b2d55?s=96&d=mm&r=g","caption":"Editorial team"},"sameAs":["https:\/\/blogs.isb.edu"],"url":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/author\/isb_blog_user_admin\/"}]}},"_links":{"self":[{"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/posts\/645"}],"collection":[{"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/comments?post=645"}],"version-history":[{"count":1,"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/posts\/645\/revisions"}],"predecessor-version":[{"id":2014,"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/posts\/645\/revisions\/2014"}],"wp:attachment":[{"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/media?parent=645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/categories?post=645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.isb.edu\/centre-for-family-enterprise\/wp-json\/wp\/v2\/tags?post=645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}