Family businesses face many hurdles. One of the biggest hurdles for family businesses (as for all businesses) is keeping and retaining talent. Family businesses have to compete for talent against bigger, more established companies with proven track records like Microsoft or Amazon and with up-and-coming startups which sometimes espouse that they will be the next Facebook or Twitter.
In order to compete for talent against both these bigger companies with deep pockets (which can afford to pay higher salaries than many family-owned businesses) and smaller companies (which dangle the specter of potentially lucrative stock options), family businesses need to understand that people (i.e., potential employees) are attracted to different employers for different reasons. Some people are attracted to particular employers for purely monetary or status reasons. However, many other people are attracted to particular employers for less tangible reasons such as because they (a) believe in the mission of the company, (b) feel that they will build useful skills, (c) want to make certain connections, (d) could see themselves making a difference at the company or being promoted at the company, or (e) really like the work-life balance or the perks provided. While a family owned business can probably do little to enhance (a) through (c) above for particular job types, it is the last two segments of people—those wanting to grow with the family owned business and those attracted to the perks of the family owned business—that this article is generally intended to address.
Fostering an Environment where the Employee Grows with the Family Owned Business
Many employers give lip service to retention. However, family owned businesses know full well that it costs a lot to replace an employee. A recent study estimates that losing an employee costs approximately 20% of that employee’s salary. This cost is a pure economic loss because no additional sales or benefit is achieved for the employer in losing an employee. Moreover, since 20% of workers leave jobs voluntarily, turnover costs employers substantial money each year. For family-owned businesses, this loss might feel especially pronounced because family businesses tend to be smaller and, as such, there are fewer departments to absorb the turnovers costs. There also tend to be fewer layers of management between the owner(s) and the employees, making the cost of turnover even higher in terms of emotional costs or lower morale of other employees.
So, what can family-owned businesses do to foster an environment where employees grow with the company? They can do such things as:
- Offering different career paths for employees depending on the employees’ aspirations at their stage of life and linking compensation with that career path. For example, those starting families or growing their families may want a career trajectory that has more normal hours or is less demanding schedule or travel-wise. This career trajectory has historically been viewed as the “mommy track,” which implies that you can never get off of it and you have a lower status. The trick with changing this perception is making this career trajectory decision a temporary or permanent decision based on the employees wishes. Much like a freeway that has off-ramps and onramps, making the “mommy track” (which dads can use too!) less stigmatized with more on and off ramps could make the “mommy track” more accepted and could help retain talent.
- Meeting routinely to discuss career planning at least twice a year (or better yet quarterly) and have a dialogue with employees about where they see themselves going and what resources (if any) they need from the employer to accomplish their goals.
- Providing cross-training so that should an employee need help or coverage, there is another person adequately trained who can fill in for that employee.
Facilitating Work-Life Balance
Family-owned business can facilitate work-life balance by understanding that not all employees aspire for the same things at the same time. In practice, this means that family-owned businesses can:
- Provide flexible hours that employees can take advantage of.
- Allow telecommuting for certain employees whose work can be done remotely (realizing that there may be tax implications for employees who telecommute by living in one state and working in another state).
- Initiate programs for employees who do not need to be in the office where employees can choose to work ten (10) hour days four (4) days a week.
- Arrange for flexible spending benefits such as Wage Works which allow pre-tax money to be taken out by the employer for commuting expenses and reimbursed at a later time.
- Have an arrangement with a car or taxi service or otherwise reimburse employees who typically commute via public transportation and need to leave work early unexpectedly (e.g., for family emergencies).
Providing Valuable Perks
Since family-owned businesses may be more nimble in their decision-making apparatus than many large companies, they can take advantage of their unique decision-making structure to provide valuable perks to employees such as:
- Providing generous maternity and paternity leave to new parents (paid or unpaid or a combination of the two).
- Allowing employees flexibility in their schedules (as discussed above).
- Creating a pleasurable work-environment for working moms by (a) providing locks on office doors so that nursing moms can pump or, alternatively, having a dedicated room where nursing moms can pump, (b) possibly having on-site daycare or discounted daycare, and (c) having a formal program which offsets the cost of backup childcare should the primary caregiver (e.g., nanny or spouse) get sick or become otherwise temporarily unavailable.
- Having a company-sponsored picnic or other gathering on a weekend day or a weeknight where employees and their families and significant others can mingle in a social setting.
- Paying for a meal service for new parents or provide a stipend for a certain amount of meal delivery services.
- Sending a small gift to an employee who has just had a baby. Something like a rocking horse or stuffed animal with other goodies that can be used when the child is older might be a good idea, as every time that the employee looks at that rocking horse or stuffed animal, the employer is thought of fondly.
- Hosting a baby shower during lunch or after work if an employee is having a baby.
Note, however, that some of these perks might create tax liability, employment or benefits obligations, or other legal concerns for you and/or your employee, so you should consult with an attorney before implementing any of these initiatives. Notwithstanding this, the above lists provides some thoughts on how family-owned businesses can differentiate themselves from competitors by meeting the needs of employees with young families and providing perks and accommodations contributing to a better work-life balance.