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HUMAN RESOURCES


often pamper employees to elicit loyalty, initiative, and collaboration”. Employees identify with the values of the family and feel a sense of stewardship in perpetuating them.


This is reinforced in some family businesses by


the policy of recruiting managers from within, on the basis that they have been socialised into the values. The risk that goes with such a policy is that firms may unduly limit their access to the best skills and create an “inbred” culture.


Synergies at work Family, people and financial capital are all interrelated. There are many synergies to be found between them. Family businesses build for the future by “socialising


the workforce” – ensuring the values that are held dear by the family are shared across the generations with all who work in the company. Family businesses also face challenges in attracting top talent and promoting diversity and equality of opportunity where there is a glass ceiling with family members taking most senior management positions and seats on the board. Engaging employees in the long-term development


of the company is common in family businesses. They particularly put emphasis on training, R&D, and employee benefits. Timken’s response to the 1980s recession was not


to lay people off, as their competitors were doing, but to put many of their employees to work in R&D. This new direction allowed Timken to stay at the forefront of jet engine design. By finding new and forward-looking ways to engage with employees during tough times, they recreated themselves. There is evidence from North America that family


businesses spend more on human resources, training and social benefits for their staff than non-family businesses. The best offer on-the-job training, courses, mentoring, sabbaticals and job rotation programmes. This ensures that the company nurtures the talent of their employees getting the best out of them and enabling personal fulfilment. Career paths in family businesses are often more flexible with the option for employees to make lateral job changes. For some family firms sharing ownership with


unintended glass ceilings due to family members taking most of the senior management positions and seats on the board. The issue of remuneration is another critical challenge for family businesses. Defining fair reward for family members working in the business and for non- family executives at board level requires schemes that reward long-term value creation and align managers with owners in achieving the company’s strategic goals.


Employees as stewards The best family businesses create a sense of ownership that extends beyond the family. Miller and Le Breton- Miller talk about the way family businesses “socialize staff to assure that these values will prevail, and


employees is a strategy that has been adopted to foster employee engagement. The use of an ESOP (employee share ownership plan), allows employees to participate in the ownership of their employing company on a significant scale in a tax efficient way. This form of hybrid ownership structure can strengthen employee motivation, and help to sustain good performance. A well-known example of a shared family and employee ownership structure is at Wilkin & Sons, a preserves manufacturer, where shares were transferred to a trust for the employees and which currently holds over half the issued share capital.


From the Institute of Family Business report, Family Business Stewardship, June 2011. www.ifb.org.uk


FAMILY OFFICE: ASIA TOMORROW 49


OPERATIONS


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