Hiring and keeping the right people

Choosing and keeping motivated and competent employees is a huge problem for family businesses, especially since most do not have the resources and reputation of larger firms.  Having gotten used to practically free labor (from spouses, children, even in-laws), family businesses are often reluctant—or even unable—to pay market rates to entice and keep top talents.

While the first or even second generations have little choice but to be the Juan and Juana of all trades, in our competitive world today, young people have more options.  They are not easily swayed by stories of the sacrifices of their elders, threats of becoming prodigal sons if they choose not to work for the family, or even promises of having top positions overnight.

How can family businesses encourage their people to dedicate their lives to the enterprise? By following the strategies of professional companies.

Family businesses are usually fluid, which can be a boon or a bane.

Employees take on a variety of challenging roles in a short time, often with direct access to the founder, accelerating their learning curve. However, because functions often overlap, many employees do not know which to prioritize, hurting the business in the process.

“At first it was exciting to be the assistant to the president, right out of college,” says Maria (not her real name).  “My boss built the business from scratch, and she treats me well.  When she goes abroad, she comes back with a gift for me, like branded bags.

“But there were only four of us doing everything: dealing with customers, coordinating with suppliers, conducting quality control and marketing.  I wanted to quit but my boss begged me to stay. I took a leave, with pay. Then my boss hired two more people for finance and accounting, which are not my strengths.”

Maria is still with her boss, but her role is more defined now. She is focused on operations and marketing.

Many family businesses hire candidates through referrals from friends and relatives.  While this may work, it may also backfire, particularly if employees are not suitable for the position to begin with, or develop a sense of entitlement.

To prevent these scenarios, some businesses follow the route of bigger companies, and advertise in print or online.  But because they are not as well-known, potential employees may not feel inclined to join them.

Instead of competing with bigger firms, family businesses need to sell their unique strengths. What is the core of their business? Aside from a reasonable salary, what else makes the business exciting?

Millennials also want to know: How does the business make a difference in the world?

“I’d rather be a big fish in a small pond,” says Maria.  “My friends from school are mostly working in big banks or retail firms, while I am working in a business with less than ten employees.  But my friends are only at the manager level, and have to work their way up to vice president, while I am already there!

“With my boss’ work ethic, we are inspired to make our small pond bigger.”

Just because family businesses may not be as huge as other corporations, it does not mean they should settle for just any employee.

“My father did not want to invest in getting qualified professionals,” says Tomas (not his real name). “And our business never grew. My father felt that we could do everything, and hiring other people who require bigger salaries would only be a drain on the finances.

“After our father passed away, my brothers and I felt that the only way we could sustain the enterprise was to hire a few—we could not afford more than a couple—great individuals. We were very choosey, and the first one we hired was not a good fit. On paper, he looked good, but he was quite laid-back. But the next one we selected is excellent. He is still with us, and he has been invaluable in making our profits grow.”

“Aptitude counts,” says Sanjay Modi of job search website Monster.com in The Straits Times. “But attitude makes all the difference for a small business … Competencies can be taught over time … [But] attitude, personality and work ethics are inherent traits within candidates that often cannot be changed.

“Make sure you have the means to properly assess a candidate’s personality from the get go.  Do … values align with your company’s?  Will his or her personality mesh with the rest of the team?  Are [they] likely to help out in other areas of your [business] as it gets off the ground?”

Queena N. Lee-Chua is on the board of directors of the Ateneo de Manila’s Family Business Development Center.  Get her book “Successful Family Businesses” at the University Press (e-mail [email protected]).  E-mail the author at [email protected].