Here is a scene that plays out in family businesses everywhere. A nephew finishes school. He has no plan, so somebody says "he can help out at the shop for now." Five years later he holds a title nobody can define, a...
Here is a scene that plays out in family businesses everywhere. A nephew finishes school. He has no plan, so somebody says "he can help out at the shop for now." Five years later he holds a title nobody can define, a salary nobody can justify, and a seat at the table nobody can take away without starting a war. Nobody decided this. It just happened, one small favor at a time.
The fix costs you one evening and one page. You write a family employment policy now, while every candidate is hypothetical and nobody's feelings are on the line. David Bentall, who lived through the collapse of his own family's construction empire and then spent decades advising business families, includes a sample employment policy in Leaving a Legacy: Navigating Family Business Succession (2012) for exactly this reason: the rules only feel fair if they existed before the person they apply to.
This guide gives you the four rules that matter, the arguments you will hear against each one, and a fill-in template you can adopt this week. Budget 90 minutes for the family conversation and 30 minutes to write the final page.
Timing is the whole trick. A policy written after your daughter applies is a verdict on your daughter. A policy written three years earlier is just the rules of the house, the same way a speed limit is not a personal attack on any one driver.
Peter Leach and Tony Bogod, who advised family firms at BDO for decades, put entry criteria at the top of their governance checklist because employment is where the family system and the business system collide hardest. The family system runs on unconditional acceptance. The business system runs on performance. When a family member walks through the office door, both systems claim them, and without a written policy the family system usually wins, which is how businesses fill up with people who cannot be managed and cannot be fired.
Craig Aronoff and John Ward add the multigenerational warning in From Siblings to Cousins: treating every family member equally regardless of contribution is what destroys cousin generations. Equal pay for unequal work reads as fairness in year one and theft by year ten. The cousins who carry the business subsidize the cousins who coast, resentment compounds quietly, and the eventual explosion takes the business with it. Merit and market pay are not harshness. They are the only arrangement that protects the relationships, because they remove the daily arithmetic of who is freeloading on whom.
Rule 1: Prove yourself outside first. This is Leach and Bogod's golden rule of family employment: family members earn a qualification and hold a real job outside the family business before they join it. Bentall's sample policy makes it concrete with an outside degree plus outside work experience as the entry bar.
The rule does three jobs at once. It gives the next generation confidence the family name cannot buy, because they know at least one employer hired them on merit. It gives them skills and comparison points the family firm cannot teach itself. And it gives everyone an honest answer to the question that otherwise haunts every family executive: could I have made it anywhere else?
The pushback you will hear: "But we need her now." You do not. A business that cannot survive three years without a specific 24-year-old has a bigger problem than staffing.
Rule 2: Market jobs at market pay. Family members are hired into real positions that the business would recruit for anyway, and paid what the position pays on the open market. Bentall's policy is blunt on both halves: market pay for market jobs, and no invented positions. If the role would not exist without the family member, it does not exist.
Get the number from outside the family. Ask your accountant, check advertised salaries for the same role, or ask a non-family manager what they would pay a stranger. Write the method into the policy so nobody has to negotiate with their own parent.
The pushback: "She is family, she deserves more." Then give her more as family: gifts, dividends if she is an owner, help from the family bank. Route love through family channels and pay through business channels. Mixing the two poisons both.
Rule 3: Real performance reviews. Family employees get the same reviews, on the same schedule, against the same standards as everyone else, and ideally not from their own parent. Bentall's policy insists on genuine performance reviews because the alternative is a family member who works for years without ever hearing the truth, then meets it all at once in a crisis.
If the business is too small for formal reviews, borrow the outside voice Bentall recommends throughout his book: one trusted advisor, board member, or family friend with business judgment who sits down with the family employee twice a year and tells them what a boss would tell them.
Rule 4: A dignified exit. Write down what happens when it does not work out, because sometimes it will not. A family member who underperforms gets the same warnings and the same timeline as any employee, and leaving the business does not mean leaving the family. Say that last sentence out loud in the meeting and put it in the document. The single biggest reason families dodge performance standards is the unspoken fear that firing someone from the payroll fires them from the family. Separate the two in writing and the standards become enforceable.
Copy this, argue about the blanks for 90 minutes, then sign it.
[Surname] Family Employment Policy, adopted [date]
Entry requirements. A family member may apply for employment when they have completed __ (degree, diploma, or trade qualification earned outside the business) and worked __ years in a non-family employer, including at least one promotion or increased responsibility. Applications go to __ (a non-family manager or the board where one exists), and family members compete against outside candidates for real vacancies.
Positions. Family members are hired only into positions the business would otherwise recruit for. No position will be created to accommodate a family member.
Pay. Compensation is set at market rate for the role, benchmarked by __ (accountant, advertised comparables, outside advisor) and reviewed on the same cycle as all staff. Ownership distributions, gifts, and family support are handled separately from salary and never through the payroll.
Performance. Family employees receive written performance reviews every __ months from __, who is not their parent. Promotion requires the same evidence as for any employee.
Exit. A family member who does not meet standards receives the same warnings, support, and notice as any employee. Employment status never changes family status. A family member may also resign freely, and choosing a career outside the business is honored, not punished.
In-laws. Spouses of family members may / may not be employed, under the following conditions: __. (Decide this now. Aronoff and Ward's cousin-generation research shows in-law employment is the most common ambiguity, and it is far easier to settle before there is a specific in-law in the room.)
Review. This policy is reviewed by the family council every __ years and applies to everyone, including the signers.
Book it like a meeting, not a dinner. Send the template ahead so nobody is ambushed. Walk the seven sections in order, 10 to 15 minutes each, and when a section deadlocks, write "TBD at next council meeting" rather than forcing it. The founder gets one voice, not a veto: Bentall's core finding is that agreed rules outlive imposed ones. Then everyone signs, including the teenagers who will one day be the applicants. Their signature today is their protection tomorrow.
Put the 90 minutes on the calendar and send the template to your family with one line: "Before anyone ever needs a job from this family, let us agree the rules while it is still nobody in particular." The best time to write an employment policy is when the only applicant is imaginary. That time is now.