Family perks: Benefit or boondoggle?

DvgN IN GooD ECoNOMIC TIMES, I-lperks can be a sensltlve lssue. raising the eyebrows of employees who feel equally committed to the success of the business.

In challenging economic times, and in an era of cost-cutting and employee reductions, perks can create great bitterness among employees who see family members as abusing their positions within the business. Clearly, a healthy dialogue among family owners and/or managers can help the family think through the impact of these perks and determine if their current policy needs a revamp.

Examples of normal perks include cars for family employees, club mem- berships, and use of company credit cards. Most families are quiet about perks not afforded to non-familY employees. [n the current economic environment, when hardworking employees see family emPloYees using corporate dollars for what appear to be personal expenses, they often feel a sense of injustice.

A thoughtful client recently stated that when thinking about perks, the primary question should be, "How will this impact the business?" So often, families are focused internally on the subject of perks, exPloring whether perks are distributed fairly throughout the family. In light of the challenges involved with motivating an employee workforce during a time of cutbacks. families would do well to consider not only the broader impact that their perks have on the organization, but also the trust level between employees and the owning familY. While there are many instances in which certain perks are legal, families are cautioned from letting feelings of entitlement blur their sensitivity to the detrimental effects on employees' morale and their trust in family management if those practices are seen as abusive and unfair.

Examining the Perks Policy

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Fas0oat'" Finish withstands up to 3,0fi) hours and more during independent salt spray testing www.fasenamerica.com c There is tension between .t'unilt members over the business perks giv,en to Jamily employees who work in the business. Frequently, those who do not work in the business will be sensitive to a lack of fairness, particularly when a family member in the business receives a perk that is not given to other employees. This implies that the perk is based only on the person's family status.

If it is determined that family status is the primary motivator, then it is a clear message to those family members not in the business that they are not of the same status, and this causes tension for the family. When this issue surfaces, it is a good time to review the purposes and motivations behind the perks.

Non-family emplol,ees are y,erbulizing Jiustation about certain Jamily perks that may be taken.ln our experience, this discontent is frequently voiced about a specific person who may not be performing well within the business. Rather than disregard the concern as being un inappropriatc statement on the part of the employee, care should be taken to make sure there is a sound basis for the oerk being taken.

. A J'amily perk is justiJietl because of the low compensatiotr paicl to.fumi\' members working in the business. Nothing stirs up more distress than family employees being paid at a discount rate because they are family. Our experience shows that paying market rates is generally seen as the most fair and appropriare compensation practice, and doing so often makes it unnecessary for certain perks to be used as a balancing mechanism.

. You have not checked to moke sure that the perk is legall-v solitl according to your CPA. Many families take perks as an ownership or management benefit without an awareness of the legal implications of the practice. Ask your CPA if there are any concerns about the perks that family members receive. If the answer is yes, the matter should be addressed immediately.

Keeping a Healthy Dialogue

Perks are tricky issues, and the family business unit needs to consider many scenarios. ls it appropriute Lo have company employees, vendors or suppliers do work on a shareholder's personal home? What are the expectations for payment for those services? ls there a discount? Is it fiee?

Credit cards iind gas cards for family employees are common perks. Does the person's position require that he or she hold a credit card or a gas card in order to perform their job, and does the business have a clear policy on whether personal expenses need to be reimbursed'? It is important to give care and attention to these and other situations that might exist within your perks policy.

Perks are a sourcc of conflict and tension, not only among family groups but also between different stakeholders in the business. A healthy dialogue among owners about appropriate perks and the policies that govern them can help reduce and avoid conflict in the family enterprise. It might also motivate your employees to a greater sense of commitment knowing that you care about the health of the business as much as they do.

Christopher Eckrir'h is u principal oJ' the Fumilv- Business Consultirt14 Group, Mariettu, Ga.; (800) 551 0633. Hc t:an be r e u c lt c tl rt t e c' k r c h @ e.fa m i I y b us n c.t.t.<' om. Rtltrintad v itlt ltcrmissiott /r-on T ltt ['anilt Busincss Atlvisor, u cttptriglttcl lttrltlicatiott ol L'unih Enterpri.\( Publislvrt. No portiott ol thi.s trticlt nut ln reltntducatl ttitlutrt pcnttissittrr ol Fumilt lintcrprise

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'IIETCHIR' MOUTDINGS"

Arthur Kroonenberg, 80, retired third-generation co-owner of Kroonenberg Lumber, Denver, Co., died Feb. 5 from heart problems.

Mr. Kroonenberg had worked in the family business, which was started by his grandfather after he emigrated to the U.S. from Holland.

After serving with the U.S. Army in Korea, he and his brother ran the business. In 1972, a second Yard was built in Berthoud. Co.. and the whole company was sold in 1998.

Donald Gustav "Gus" Allen, 70, No. Ca.-based lumber hauler, died Jan. 30 in Crescent City, Ca.

A native of Minnesota, he moved to California in 1954 and two years later began driving a truck for Del Norte Box. He also hauled for Standard Veneer, McNamara & Peep,

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Simonson's Lumber, B&R Sawmills, South Coast Lumber Co., Snoozie Shavings, and Simpson Timber Co.

In the late 1960s, he formed DG Allen Trucking, Crescent City, later renaming it Gus Allen Trucking, and operated it until his passing.

Holtand C. "Bo" Bowden, 76, owner of Bowden Lumber & Hardware and Bowden Cabinet, Twentynine Palms, Ca., died Feb. 11 in Palm Springs, Ca.

He opened the two LBM businesses after he started his own construction company in 1980. He retired for health reasons in the 1990s.

Clifford Maxwell BrYden, 93, retired logging supervisor for Roseburg Lumber, Roseburg, Or., died Jan. 28 in Roseburg.

After graduating from Yale with a master's degree in forestry, he joined Roseburg in 1954. He retired in 19'79.

Sacramento Depot Hit bY 2Thieves, 1 Pair of Pliers

Two thieves stole three boxes of items from a Home DePot in Sacramento, Ca., on Feb. 23, and one escaped by pulling a Pair of pliers on store security guards. Authorities identified AnthonY Cervantes. 26, and Tauna Bayoneta, 24, as the culprits.

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Bayoneta was detained bY store security, but Cervantes allegedlY escaped in a vehicle after brandishing a pair of pliers. He was later arrested in his room in a nearbY hotel, where police also found illegal drugs and drug paraPhernalia. Cervantes is being held for several charges, including violating the terms of his Probation.

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