ILMA Compoundings September 2018 - 35
Developing a
compensation
policy can help provide
clear guidelines for the
family to consider when
analyzing sibling partnership compensation."
it will lay golden eggs for its owner.
If the owner gets too fixated on the
golden eggs and forgets the Sly Fox,
he'll kill the goose. Dead geese don't
lay eggs, and families miss them when
they're gone.
Compensation in sibling partnerships
becomes more straightforward when
viewed as an important part of keeping
the business healthy for its owners.
Owners want their businesses to grow
profitably. Profitable growth is a result of
excellent decisions made by managers.
Owners understand that overpaying
underqualified managers, whether
family member or stranger, isn't going to
protect the goose for very long.
Developing a compensation policy
can help provide clear guidelines for
the family to consider when analyzing
sibling partnership compensation.
Some important elements of compensation policies include:
* The concern that any advantage
given to family members working
in the business will be seen by
employees as family socialism superseding free-market capitalism.
* Family employees will be compensated in the same manner as
non-family employees - period.
* Compensation levels will be
determined by fair market value
analysis.
* Family member performance will
be measured consistently, and
compensation adjustments will be
made accordingly.
* Family employees are expected to
live within their financial means
and not encumber themselves
with excessive debt or rely on
special disbursements.
* Extra compensation, when
deemed fair and reasonable by the
Board and/or Family Council,
will be provided through ownership and/or family channels.
As a mechanism for satisfying the
final point, consider compensating
family employees as owners or future
owners. Provide stipends for serving
on the Board or Family Council,
provide a fair and reasonable dividend
taken from profits when the company
performs well, or pay family members
for special ownership-related research
projects (e.g., a review of a top
competitor's strategy) or to serve on an
investment committee.
Telford is a principal
consultant at The Family
Business Consulting Group.
Adapted from A Fairly Complicated
Topic, which appears online at
The Family Business Consulting
Group's blog on family business.
35
ILMA Compoundings September 2018
Table of Contents for the Digital Edition of ILMA Compoundings September 2018
LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
INDUSTRY RUNDOWN
ROUGH ROAD AHEAD
A BRIEF HISTORY OF BASE OILS
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK
PORTRAIT
ILMA Compoundings September 2018 - Cover1
ILMA Compoundings September 2018 - Cover2
ILMA Compoundings September 2018 - 1
ILMA Compoundings September 2018 - 2
ILMA Compoundings September 2018 - LETTER FROM THE CEO
ILMA Compoundings September 2018 - INSIDE ILMA
ILMA Compoundings September 2018 - 5
ILMA Compoundings September 2018 - 6
ILMA Compoundings September 2018 - 7
ILMA Compoundings September 2018 - 8
ILMA Compoundings September 2018 - 9
ILMA Compoundings September 2018 - 10
ILMA Compoundings September 2018 - 11
ILMA Compoundings September 2018 - WHAT’S COMING UP
ILMA Compoundings September 2018 - 13
ILMA Compoundings September 2018 - INDUSTRY RUNDOWN
ILMA Compoundings September 2018 - 15
ILMA Compoundings September 2018 - 16
ILMA Compoundings September 2018 - 17
ILMA Compoundings September 2018 - 18
ILMA Compoundings September 2018 - 19
ILMA Compoundings September 2018 - 20
ILMA Compoundings September 2018 - 21
ILMA Compoundings September 2018 - ROUGH ROAD AHEAD
ILMA Compoundings September 2018 - 23
ILMA Compoundings September 2018 - 24
ILMA Compoundings September 2018 - 25
ILMA Compoundings September 2018 - 26
ILMA Compoundings September 2018 - 27
ILMA Compoundings September 2018 - 28
ILMA Compoundings September 2018 - 29
ILMA Compoundings September 2018 - A BRIEF HISTORY OF BASE OILS
ILMA Compoundings September 2018 - 31
ILMA Compoundings September 2018 - 32
ILMA Compoundings September 2018 - 33
ILMA Compoundings September 2018 - BUSINESS HUB
ILMA Compoundings September 2018 - 35
ILMA Compoundings September 2018 - COUNSEL COMPOUND
ILMA Compoundings September 2018 - 37
ILMA Compoundings September 2018 - WASHINGTON LANDSCAPE
ILMA Compoundings September 2018 - 39
ILMA Compoundings September 2018 - IN NETWORK
ILMA Compoundings September 2018 - 41
ILMA Compoundings September 2018 - 42
ILMA Compoundings September 2018 - 43
ILMA Compoundings September 2018 - PORTRAIT
ILMA Compoundings September 2018 - Cover3
ILMA Compoundings September 2018 - Cover4
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