Case 1: Compensation based on diverse levels of responsibility

The founder of a family business had all three of his sons working in the business. The eldest son had both the skill and the motivation to take over his father’s role as head of the company. But whenever the father tried to address a viable succession plan sibling rivalry issues erupted and little progress was made. Eventually the eldest son threatened to leave the business unless a succession plan was implemented along with a completely revised compensation structure.

The family shared a value system based on sportsmanship and teamwork. The brothers had worked as teammates outside the company with dramatic results. They deeply appreciated the differences in team roles: All positions were essential but some players possessed more skills than did others, and certain team positions carried greater weight.

All members of this family agreed that a new compensation structure based on the differences in roles and the diverse levels of responsibility would be fair and sportsmanlike. But they had major concerns about how roles would be defined and evaluated; it would not have been advisable for the father to evaluate his sons. The family would never have seen him as the head of the business making difficult business decisions. Rather, he would be perceived as a father determining which of his sons was most valuable, further fueling sibling rivalry issues.

We worked with the family for nine months to complete a traditional performance based compensation plan aligned with their team-based values. Once the new compensation structure gained the entire family’s approval, the family members were able to channel renewed energy into other business challenges, and to grow and prosper both collectively and individually in the ensuing years.