How are family employment and management succession handled in a family business?
In general, the larger a family business, the more likely it is to recognize the need to hire professional management and to hire at all levels based on merit. That is not to say that members of the owning family cannot be qualified; it is to say that family members who wish to be employed must qualify on their merits. Family members are sometimes given an opportunity to prove themselves in management training programs but with no guarantees. When a business incorporates, its board assumes the responsibility to hire, evaluate, and compensate the CEO, who in turn hires, evaluates, and compensates the rest of the management team. In the absence of a board, the founder or owner-manager does it all. In either case, the family inevitably weighs in, whether from the kitchen table or from the family council. The desirability of explicit guidelines becomes evident within a generation or two of the founder. For more information on CEO Succession, see The Role of the Board in CEO Succession.
