Compensation Strategies for Tampa Family Owned Businesses
27 Aug 2021
At Office Movers of Florida, we’re closely connected to many local Tampa businesses.
Our job is to help them relocate office space when needed and to help them install, rearrange or assemble furniture in their space.
As we’ve worked with many family-owned businesses over the years, we’ve been able to watch many of them grow. As a family-run business ourselves, we’re always excited to see other companies who are similar to ours, have continued success.
Did you realize the impact that family-owned businesses have on the U.S. economy?
The U.S. Small Business Administration found that “of the 28.8 million small businesses in the U.S., 19% are family-owned businesses (any business in which two or more family members operate the company and the majority control lies within the family). These businesses employ 60% of the U.S. workforce and generate 64% of America’s gross domestic product (GDP).”
What that report also showed is that one of the largest challenges that family businesses face is based around correctly implementing a good strategy for compensation and benefits. While we may think of family-run businesses as “mom and pop” shops like restaurants and HVAC companies, there are plenty of family businesses that are multi-million dollar operations.
So, figuring out a smart compensation approach can be a real issue. We reached out to a local Tampa compensation consulting firm that has years of experience helping family businesses create good pay strategies.
Joe Kager at The POE Group offered these compensation tips:
1. Involve family stakeholders throughout the engagement.
All family members who have a stake in the company should be involved in the process. Family stakeholder participation helps ensure that everyone understands the underlying issues early in the process, develops trust along the way, and has the opportunity to learn about and help develop the company’s approach to compensation.
2. Use market data to anchor the compensation plan.
We strongly recommend that family members working in the business be paid commensurate to the value of their position in the external market.
It is common practice for family businesses to either overpay employees who are part of the family or undercompensate them for the work that they provide. Neither scenario is ideal, as both will exacerbate issues with family members and non-family employees alike.
3. Introduce pay-for-performance incentives.
A well-designed pay-for-performance program aligns pay with the achievement of the business’s operational and financial goals and measures employees objectively.
Objective measurement is especially important at family-run businesses, as it is critical that everyone feels like the incentive plan payouts are grounded in fairness and linked to actual performance.
4. Add some formality to the work relationship.
Developing plan documents, employment agreements, and pay review processes lessens the perception that pay decisions may not be fair.
Achieving collective agreement on a compensation plan for a family business is part compensation consulting and part psychology. Following the tips above can help lead to a positive outcome.
At the end of the day, family relationships are important and don’t need to be put at risk by disagreements regarding pay. We can help navigate the process of creating fair and equitable compensation programs.
These tips were also featured in another Florida family-run business, The Observer in their recent articles:
A Touchy Topic: Compensation in Family-Owned Businesses
Five Steps Every Family Business Should Take for a Successful Succession
We hope you find this helpful and, if in need of family business strategies, will reach out to local consultants who could help.
At Office Movers of Florida, we can’t help with determining compensation, but we are the best commercial moving company in Tampa Bay!
