By Kate Barnwell, Stephanie Brun de Pontet

An advantage of private business ownership is the freedom to make your own decisions, innovating and improvising to create success. Family employee compensation is one tool family leaders can use to improvise solutions to challenges unique to family businesses. For example, how to fairly employ your children or how to entice the next generation to leave outside careers to return to the family enterprise.

In some cases, family leaders use employment compensation to “take care of the family” without connecting this to business success. While these approaches can work in the short term or under a particular leader’s control, we observe that over time, they prove to be incompatible with growing a successful business and sustaining family ownership. 

Read more at https://www.thefbcg.com/resource/paying-family-in-a-family-business-where-good-intentions-create-hidden-risks/