MLR

Family businesses: Challenges in recruiting skilled personnel

People are a critical component in nearly every business. Getting and keeping qualified, dedicated employees is essential for a business to succeed, and it is one of today’s greatest challenges.

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While all businesses, large and small, face the challenge, closely held and family businesses face their own particular challenges.

Say the term “family business” to 10 applicants, and you’ll get a variety of reactions, some positive and some negative.
Most applicants have pre-defined notions of what working for a family business is like, and their notions are deeply ingrained.

Some will say they love it – “I was treated like family,” or “I liked the small team environment.” Others might have a totally different opinion – “Family businesses are dysfunctional,” or “I could never get promoted because I wasn’t part of the family, so what’s the point?“

Structure, or lack thereof, is another challenge in recruiting skilled personnel.

Larger corporate companies generally have a well-defined job structure and path for job growth. There are predefined titles and salary bands that can be readily provided to applicants so that they can see their opportunity for growth and income advances.

Many closely held and family companies lack that structure, either by conscious choice or because the paths are not clearly definable. In either case, it is more difficult for an applicant to predict where he or she might be able to go in a company and in what time frame. This can sometimes cause you to lose good applicants.

Compensation is yet another challenge for many companies. Larger companies can afford to offer higher salaries and better benefits, all part of the compensation equation. Many provide better retirement packages, tuition reimbursement, more vacation time and even community service days in some cases.

Smaller companies have a difficult time providing the same level of benefits because of cost factors and manpower. A smaller company can’t afford to have people away from their positions as often because there are fewer people to step in to fill the void. While they might like to offer more time off, it simply isn’t practical in many cases.

The availability of training is another challenge for many closely held/family businesses. Because today’s applicants are very conscious of their need to continue growing in skills and expertise, they will often gravitate to companies that have a track record of providing ongoing training.

Internal training programs often do not exist in smaller companies because of the costs involved and lack of economies of scale. Unless you show through your website or reputation in the community that you value and provide ongoing training (internally or through external sources), you may lose some good candidates to larger corporate opportunities.

So, how does a closely held/family business compete for good employees? Here are a few ideas to consider:

1. Be honest with yourself about your company culture and atmosphere. Is your company one where only family members move up? Do you have “family discussions” that may be seen as confrontational in front of employees?

If you’re honest with yourself about what it is like to work in your company, you can be honest with applicants. Knowing what to expect if they come on board will help them make better decisions, and it will help avoid the “What have I gotten myself into?” question that could lead to resignations.

2. Provide some structure to help people know what to expect. You may not be able to provide the same level of structure a big company can, but you can share information on past experiences and how employees have progressed or been rewarded.

Share information about how often you provide performance appraisals and about how you determine salary increases (merit, profit-sharing, tenure, etc.). Then, of course, make sure you follow through on those pieces. Again, be honest with yourself about what really happens in your business so that you can be honest with applicants.

3. Consider ways to make compensation/benefits more appealing. Talk to your advisers about benefits that can be made available in a cost-effective way. Pay attention to the compensation trends in your market and make sure you are staying as competitive as possible.

Though you may not be able to provide the same level of pay and benefits, some employees may be willing to earn less to be in a more “family-oriented” environment. Play up your company’s positive points.

4. Make training a priority. There are thousands of training programs available through webinars, community colleges, industry associations, etc. Many are low cost. Understand your employees’ need for and interest in training, and be willing to invest some time and effort into supporting that interest.