Managing Employees and HR

Running a Family Business - Keeping it in the Family

CommunityTeam — Mon, 01 Jun 2009 17:48:00 GMT

How to keep your family business alive, prospering and-most importantly-in the family

By Christopher Freeburn

Entrepreneurs who have invested years of time, dedication, and resources into building a business often want to see that enterprise live on as a family asset even after they step aside from the actual operation of the company. Many hope to see their new business become something that each new generation of their family can inherit, passing the business from themselves to the children and grand children and beyond.

Unfortunately for these ambitions, the track record of family businesses is not good. "Keeping a family business alive is perhaps the toughest management job on Earth," says John L. Ward, author of Keeping the Family Business Healthy: How to Plan for Continuing Growth, Profitability and Family Leadership. "Only thirteen percent of successful family businesses last through the third generation. Less than two thirds survive the second generation," he adds, noting*, "Only five percent of all businesses ever started actually become family businesses through the appointment of a successor from the next generation."*

Many family business fail to remain under the control of the originating family because of changing market conditions, financial difficulties, or disinterest by succeeding generations. Most, however, fail to pass from one generation to another simply because the original business owner failed to plan for the smooth transition of ownership and management to successive generations.

The Necessity of Planning
The first step toward making sure that your business stays in your family after you step down is to develop a clear, well-considered succession plan that clearly defines who owns the company and who will run it once you leave. In fact, you should have a succession plan in place long before you consider stepping aside. Without planning, the business and family can be thrown into confusion or rancorous dispute in the event of a sudden and unexpected change in company leadership.

One reason many small business owners neglect succession planning is the emotional issues that such planning raises. Making succession decisions requires the business owner to choose who should get control or ownership of the business in the future. This requires taking a levelheaded view of the available family members to determine who among them has the requisite skills and temperament to manage the business, and who does not. Difficult questions have to be raised and answered: Who will run the business? How will the ownership of the business be distributed? Which family members will not be included in the business's management and ownership? The answers to these questions are sure to provoke some measure of hurt feelings among family members, since not every one can be the CEO.

Further complicating the planning process are the divergent interests of various family members. Not every family member may be interested in joining the business. "The natural desire of a child to steer a course independent of his or her parents can also nip succession plans in the bud," says Ward. A family business can also magnify family issues because the separation between family life and the workplace is thin or non-existent. "Human emotions such as pride or jealousy may become enlarged when work and home are intertwined," warns Ward. There may be disagreement among family members about the distribution of ownership or responsibility in the company. "These are emotionally trying issues for all concerned. As a result, many families abandon the effort at succession because they fear it will destroy the family," Ward says.

Nevertheless, proper planning is the only way a family can assure that a business remains in its hands over the long term. The sooner such planning is undertaken, the better. Succession planning should incorporate a variety of scenarios including potentially disinterested heirs, or a lack of viable family managers in succeeding generations. Putting together a plan in advance will help family members confront these issues as they arise in future years.

In order to increase the chances of your family retaining control of the business, your succession plan should incorporate things that combine family and business activities. For instance, creating a business-training program that offers young family members internship-like positions at the business during their school-age years is a good way to orient them toward participating in the business as they mature.

Family problems
"Many family businesses find that the family itself becomes a stumbling block," says Ward. "In later years, the family's growing financial demands tempt the owners to harvest the company's profits rather than reinvest them in additional growth." Over time, a family can come to see a business as merely an asset, rather than a place where they wish to continue working. In such cases, succeeding generations are often tempted to sell the business for an immediate profit to a non-related third party. This is the fate of many family-owned businesses.

Running a business can often exacerbate interpersonal pressures that already exist within the family.

"The rigors of business also sharpen such typical family problems as sibling rivalry or competition between generations," says Ward. Hurt feelings and ruined relationships can result from decisions made in the business, especially those involving which family members have what responsibilities at the firm. To some extent, there is almost no way to completely mitigate the fallout among family members from business decisions, since there is rarely a way to please everyone.

In the end, constructing a clearly defined succession plan as well as management structures and policies that have been spelled out beforehand will go a long way to reducing the natural friction that running a family business can generate.

How Many Current Employees are in Your Departure Lounge?

SBOCTeam — Thu, 29 Jan 2009 15:19:00 GMT

By HRExpert

Nobody likes to talk about it, even though it is happening in workplaces all across America - employees who have decided it is time to fly the coop. Departure lounges are overflowing with these types of employees - all waiting for their final boarding call.

Employees rarely start a job thinking they will tour around the company for a while and then seek greener pastures, and yet it happens all the time. Here are five things you can do to prevent employees from taking flight:

Guard Your Exits

Are employees exiting as quickly as you are hiring them? If this is the case, there is a malfunction in your hiring system. Closely examine all the parts of your hiring process to determine which pieces must be fixed. For example, suppose turnover is particularly high during the first 90 days of service. Ask yourself the following:

Are we hiring the right types of people for these jobs? Yes, it is nice to hire Ivy League graduates, but are they really well suited for beverage sales?
Are we accurately representing our jobs to candidates? If your administrative job descriptions sound more like the CEO's job, then it is time for another re-write.
Are we over-promising and under-delivering? Perhaps it is time to get real. Sure, we would all like to operate like Google, but few companies actually do. Accurately describe your work environment and let candidates decide if the fit is right for them.

Now is a great time to dust off plans you may have designed for a formal exit interview process. Start asking exiting employees what you could have done differently to have prevented them from leaving. You will then have the information you need to make changes before others fly out the door.

Formally welcome everyone onboard

Imagine a place where employees are welcomed before they even set foot on company soil. This would be a place where employees feel connected before their first official day of work. Some might even start recruiting their current co-workers to join them on this new journey. Welcome to the world of Onboarding.

Onboarding is the one chance you will get to create a positive new employee experience. Just think how productive you might have been during your first few weeks or months of employment had your current or former employer taken the time to make you feel welcomed, valued, and prepared. Come to think of it, if they would have done this, you might still be working there.

You might be thinking that you don't have time to hold someone's hand or that all employees should have to suffer just like you did. Would you feel the same if you knew that with a little effort, you would have more time to focus on other initiatives besides replacing newly-hired employees?

Make checking-in easy

Could your check-in systems use some improvements? Do your employees have to stand in long lines just to have a conversation with their manager? Are employees fully aware of how well they are performing? Or is last year's performance review still on your desk waiting to be completed?

Checking-in is a two-way street. When it comes to performance, both employees and employers should know what the other is thinking. Provide feedback throughout the year so employees can adjust their performance, while seeking feedback from employees regarding ways you can improve the management of the company.

Drop the Excess Baggage

Nothing weighs a company down more than excess weight. Do you have marginal performers hiding out behind strong team members? Are employees still in your employ who have received their fifth final warning?

In this economy, you cannot afford to have anyone or anything slowing down the momentum in your organization. Look around and begin the process of eliminating excess baggage. You will be surprised how many top performers change their travel plans once they see you are committed to building an organization of outstanding employees.

Throw in some perks

The trend of slicing and dicing employee benefits seems to be quite popular during lean economic times. Many organizations have started to charge employees for items that used to be free. But is this really a way to retain the people who you will be asking to take on more responsibility during tough economic times?

Show your employees you care. Figure out what types of perks motivate your team and then start thanking them properly.

Make these changes now and you will not have to fret the next time you hear the phrase, "This is the final boarding call..."

Bio

Roberta Chinsky Matuson is the President of Human Resource Solutions (http://www.yourhrexperts.com) and has been helping companies align their people assets with their business goals. She is considered an expert in generational workforce issues. Roberta publishes a monthly newsletter "HR Matters" http://www.yourhrexperts.com/hrjoin.cgi which is jammed with resources, articles and tips to help companies navigate through sticky and complicated HR workforce issues. Click here to read her new blog on Generation Integration http://generationintegration.typepad.com/matuson/. She can be reached at 413-582-1840 or Roberta@yourhrexperts.com.

Campus Candidates

SBOCTeam — Tue, 20 Jan 2009 15:43:00 GMT

Hiring recent college grads makes great business sense. Plus, given the chance, they could even teach you a thing or two

By Max Berry

Despite what some recent figures from America's job market would have you believe, companies of all sizes are hiring new college graduates at a higher rate than in years past. A recent survey conducted by CollegeGrad.com found that 60% of American companies surveyed plan to recruit more grads in 2008 than they did last year. The reasons for the upswing are many, as are the potential benefits of hiring some new grads of your own.

Graduate Perks
"Small companies drive the engines of job creation," says David Bedard, author of Graduate and Grow Rich. "Up and coming companies need young grads." In sluggish economic times, this may be truer than ever. Recruiting and training a new graduate at an entry-level salary is much more effective for a small business owner on a tight budget than seeking out a more experienced prospect who is already used to higher pay. Factor in the number of baby boomers reaching retirement age-not to mention the salary space they leave behind-and hiring an energetic young grad begins to look like the smartest move of all.

"More than anything, grads are looking for a break and a mentor," says Bedard. And a mentorship should not be taken lightly, especially when a young employee, just beginning their career and eager to make an impression, is so amenable to the ideas and strategies of a mentor.

There are logistical benefits to hiring new graduates as well: They're more tech savvy than generations past; they haven't had time to put down roots and are more willing to relocate than someone with a family; many of them are in debt, and will be extra motivated to get themselves back in the black. Plus, after 18 years of the classroom, new graduates are anxious to apply all that hypothetical knowledge to a real-world job-and they have the energy to do it.

The New American ‘Intrepreneur'
For all that new grads have to offer, an employer needs to offer just as much in return. "There is no such thing as a cradle-to-grave job anymore," says Bedard. "If [new grads] have any entrepreneurial spirit at all, they're going to want to test the waters."

This entrepreneurial desire to "test the waters" may have helped propagate the myth that Generation Y is a flighty bunch; pampered, demanding, ready to give their two weeks at the faintest whiff of a better offer. While Bedard concedes that the reputation may be earned in isolated cases, more than anything these children of the entrepreneurial age are, as Bedard puts it, "looking for the fit," the job that will satisfy their independent, hands-on ambitions.

When it comes to courting America's brightest graduates, the ability to offer them that may be the key advantage an independent entrepreneur has on a major corporation. A national or multi-national corporatioin is regimented in a way that may not appeal to this generation, one that subscribes to what Bedard has dubbed the "make-a-job instead of take-a-job mentality."

A small company can't offer a new graduate the signing bonus or inflated salary that a large company can. What it offers instead for a young person, hungry to find their fit and test their skills, is a stake in the future of a company, be it through stocks, profit sharing, or simply a more tactile handle on day-to-day operations. According to Bedard, a small company offers a twenty-something the chance to "be an entrepreneur within a job, to feed their desire to make decisions on the front line." Employees who look for the chance to do just that are what Bedard likes to call "intrepreneurs."

Small companies are also more likely to offer their employees flexible hours, providing for a better work-life balance, which, according to a recent CollegeGrad.com survey, now surpasses financial considerations for employees aged 21 to 30.

A Turning Tide
"More graduates are going for newer and younger companies rather than blue chips," says Bedard. He's right. Another CollegeGrad.com poll, conducted in February 2006, found that 70% of recent graduates surveyed would prefer to work for a small or mid-sized company than a large one. This may be due to growing suspicions-after years of corporate reorganization, downsizing, and, in the worst cases, outright scandal-about the scruples of many large corporations. "I see more emphasis in college and business school on ethics," says Bedard. "Ethics is a buzz word on campus and that's a good thing."

But as America's graduates begin to think outside the box as to where, and with whom, their first jobs can be found, America's entrepreneurs should keep their minds just as open. Don't rule anybody out too soon. Bedard recommends looking to smaller schools-those prowled less frequently by major corporations looking to make hires-and community colleges. "Community colleges are way ahead of four year schools when it comes to teaching entrepreneurship," he says. "They make it a part of their culture."

The benefits of making Generation Y a part of yours could be substantial.

Firing the Right Way

SBOCTeam — Tue, 28 Oct 2008 16:13:00 GMT

How To Make a Difficult Task a Little Bit Easier

By Christopher Freeburn

There are few tasks less pleasant than firing an employee. There are bound to be hurt feelings and often emotions can run high. As difficult as losing a job is for the soon-to-be-former employee, however, informing him or her of that fact can be profoundly upsetting for the employer as well, particularly in a small business setting. Worse, terminating employment can produce more than simple emotional risks. Wrongful termination lawsuits can be costly for a small business-in terms of both time and money-even if successfully defended.

So how can you minimize the stress and potential legal risks of terminating an employee?

Document your reasons
Though many states still maintain the "at will" doctrine of employment (which states that an employer can fire an employee at any time for almost any reason), many other states place some restrictions on employers regarding job termination. "Realize that even an ‘at will' employment status has an implied covenant of good faith and fair dealing," says Dr. Joanne Sujansky, founder and CEO of Key Group, a Pittsburgh-based consulting firm. "Due to this, fire with cause whenever possible and make sure to document poor performance or disciplinary offenses as they occur." Sujansky advises issuing written warnings to the employee that outline the consequences should he or she fail to improve. "If an employee's performance doesn't improve, he or she will be prepared for the consequences and you will be protected when firing the person."

Check your state's labor laws to make sure you are within your legal rights before terminating an employee. Additionally, anti-discrimination statutes common in most states can provide the terminated employee with a possible basis to pursue a legal complaint. Thus it is important for an employer to maintain sufficient documentation to clearly demonstrate that the job termination was for a valid cause and did not involve any form of legally prohibited discrimination.

For this reason, it is important for employers to keep good records on their employees and to have explained, in detail and in writing, to each employee exactly what their job entails. Having some form of employee handbook, spelling out unacceptable workplace behavior, and providing a structure for evaluating employee performance is especially helpful. If an employee has been warned about their performance, maintaining a written record of those warnings is important.

It is equally important that employers demonstrate consistent behavior toward all employees. If you tolerate tardiness from one employee, but fire another for the same, you are risking a lawsuit.

The firing process
The actual act of firing someone is rarely pleasant, but you can take steps to make the process as painless as possible.

Plan ahead. Know what you are going to say before you meet with the employee. Be able to explain your decision clearly and simply. Get to the point right away, and keep the meeting as short as possible. Dragging out the conversation only makes it worse for everyone involved.

Don't do it publicly. Firing an employee in front of his co-workers is unprofessional. Worse, it can lead to lowered office morale and become a factor in any potential litigation. Remember that juries tend to be sympathetic to workers. The firing should be done in private away from other workers.

Don't waste time. Get right to the point. "Don't start the conversation with idle chit chat, such as talking about the weather, the kids, the newest client, etc.," says Sujansky. "Don't offer the employee coffee or water or food. You want him out quickly." The sooner the firing is over, the better for all concerned.

Have a witness on hand. If you company has a human resources manager, then he or she should be present, as well as the employee's immediate supervisor.

Be clear. Explain exactly why the employee is being fired. Concentrate on his or her failure to perform according to expectations. Provide a written statement, spelling out the reasons for the termination.

Pay them. Have a check ready covering any final salary owed to the employee. If a severance package is to be offered, that should also be put in writing. In most states an employer is required to pay any outstanding salary by the next scheduled payday. Money owed by the employee to the firm cannot be deducted from the paycheck. Some states require payment for accrued vacation days. Check the labor laws in your state to make sure you pay the terminated employee everything he or she is owed. "Failure to pay terminated employees in accordance with state laws can result in civil and criminal penalties," Sujansky warns.

Be polite and professional. Losing a job can be an emotional experience. Be sympathetic, but firm.

Collect company property. This includes company IDs, company credit cards, office or company car keys, or any company owned materials that the employee may possess.

Change passwords. If the employee has access to the company computer network or online systems, cancel his or her password immediately to prevent any potential theft of company information or malicious tampering.

Keep if Confidential. Office gossip is a fact of life in any business. However, allowing the details of an employee's termination to become common knowledge in the office is unprofessional. Simply inform your other employees that the terminated worker is no longer employed at your firm and leave it at that.

An ounce of prevention
Of course, the best way to avoid the unpleasantness that accompanies firing an employee is to make sure the people you hire are a good fit for the job in the first place. A rigorous screening procedure during the hiring process, including a background check, detailed interview and clear description of the position, will go a long way toward making sure you attract the best employees for your business.