DOES THE FAMILY GET PAID TOO MUCH?

The question is relevant in many family businesses.

Imagine that the CEO, who is NOT a member of the owner family, is paid a market level salary.

Now imagine that the sales manager is the cousin of the company's main shareholder, and that the director believes that the sales manager is paid well above market level at the expense of company profits.

If the director thinks that the sales manager is being favored because of his family relationships, this may become a serious problem for the director's motivation.

To make matters worse, the informal power relations in the family business can make it difficult for the director to voice his dissatisfaction.

So what is the solution?

Salaries for employees who are members of the owner family should be addressed and proactively handled by the board and management.

All employees should be paid according to transparent criteria - and the board and management should ensure that everyone associated with the company is aware of the pay structure.

In addition, the board and shareholders should - at least in principle - have a special insight into the salaries of employees with family ties to the owner family.

This would ensure a degree of control.

How does your company ensure that remuneration is transparent and fair?