“Part of the reason that we become entrepreneurs to run our own businesses, and follow in the family footsteps is because we control our own destiny. We have that impact. That impacts us. And in a similar respect, that motivates others.” Lisë Stewart of Galliard, Inc. made the observation that the evidence of this was in room at the Session titled “Silver Spoons & Golden Handcuffs – Pay and Performance in Family Business” that she presented at the Annual NAFDMA Convention when it was held in Lancaster, Pennsylvania. One of most highly rated sessions at that Convention, her presentation offered ways to deal with issues that many of our farm families face.
Lisë noted that, “Dealing with performance and pay is even more challenging when family members are involved.” She offered examples and practical, no-nonsense advice. Drawing on her background in organizational psychology and small business, she made the information understandable and relatable for the audience members.
Here is some of the information from the session:
- Be very clear about expectations. Studies show that we are better at communicating our expectations to non-family staff. Do so with all employees, especially family.
- Pay a fair wage. A common mistake is paying children a high wage. We are not helping our children by doing this. They should receive a fair wage for their job in the open market.
- Treat all employees fairly. If family members are treated in a special way, other employees do not respect them. To help with this, find creative ways to give performance feedback. Perhaps, have them report to an advisory board rather than to you.
- Offer Pay for Performance rewards. Make sure it is tied to actual performance in the business.By helping young people be effective members of the organization, we help them to understand the bigger picture and carry on the family business. It is helpful to talk to your children about your personal values, talk about the legacy you want to leave behind. Take the time to write down the things that are important to you. This becomes the basis that will help to guide the younger members of the family towards becoming effective contributors.
She also suggested that you start with a Strategic Plan – write down what you want to accomplish within the next 2-3 years. This is meant to tell other people who are important to you and your business how they can have an impact on your business being profitable and successful. This also helps them understand what is expected of them. Keep it simple. The plan does not have to be long, one or two pages is long enough. After reading the plan, you, your family members and your employees should be able to identify:
What do you want to be?
How do you want to grow?
What are the 3 or 4 most important things to do to get there?
What activities will you undertake – what are the priorities?
Next, develop your Key Result Areas – This is how you can tell if your employees are doing a good job. When the result areas are shared with your employees they should be able to see what areas they can influence to help achieve the goal of the business. Some of the areas may include: Sales, Operations, Hiring, New Product Development, or Information Technology.
Measuring your success is an important part of the process. Have measurables in your plan that everyone can contribute to. Not everyone who works for you can have an impact on pricing or cost of labor. Be sure to include something about quality of service or compliments from customers in your Strategic Plan. The purpose of the plan is to inspire the best performance possible and help people, both family and non-family to be effective contributors to the organization.
Next step is to create Winning Initiatives. This is the pay for performance part, but you can be creative here. Incentives and pay for performance programs do not have to be monetary. The way to do this is to start small. You can also recognize that you do not have to do this for all your employees. If you have hundreds of seasonal employees it may not be possible to include them. It is important to include your key people and especially family members to help to identify high impact/leverage areas where improvements can help the business. And, because their success, as well as that of the business depends on reaching the goals set in your plan, include them in developing clear objectives and outcomes.
It has been proven that when we start to develop these techniques in any organization, big or small, performance increases. When people have a belief that they are truly impacting something and that they have control over their own destiny – their performance goes up which is a win for everyone!
A version of this article originally appeared in the NAFDMA membership e-newsletter.