BDO’s Suzy Munt looks at the best way to deal with remuneration in family businesses

Asking for a pay rise can be challenging for those working in a family business but these expert tips could help seal the deal.

Asking for a pay rise from your boss is hard. Working in a family business has unique challenges and remuneration is one that often tops the list.

I have come across situations where remuneration is not discussed amongst family members, despite it being a key decision that any business needs to make.

“He gets paid more than me!”; “when you own the company, you can pay yourself what you like”; “where are my dividends?” are comments I often hear.

For those working in the business, not being paid enough because “all this will be yours one day” is a common scenario.

But what happens when there is no plan is place and a sudden death leads to other siblings also owning shares, even if they don’t work in the business – how is that fair?

The sibling working in the business may want to reinvest all the profits, but the one outside of it may want the dividends.

And what about non-family members – why are they important?

Tension can easily arise with non-family employees if family members are perceived to be over-remunerated.

Finding middle ground can be tricky. It comes down to understanding all the stakeholders involved and their interests.

There are seven different hats people can wear inside a family business – whether you are a family member not involved in the business at all, a family member who is also an owner or employee (or both) or a non-family member who is an owner, employee (or both).

Each hat has a different perspective and if the needs of each are not considered, well communicated or a well-documented plan is not agreed, it can all fall apart very quickly.

The more hats you have, the more problems that can occur.

Ultimately, the business’ continuity must be at the forefront of every decision.

I’m not saying to remove the heart from the family business, but you need to do it in a way that promotes harmony amongst all your ‘hats’ and the best future for the business.

In my opinion, those family businesses that have well documented and well communicated remuneration plans, employment rules and dividend policies for both family and non-family members will be ahead of the pack.

Suzy Munt is a family business specialist and Associate Director at BDO based in the Brisbane office.