Crouser & Associates Performance Group program helps printers prosper through on-site
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Family Pay
Copyright Thomas P. Crouser, September 24, 1995
Dear Friends. . .
Received a copy of an advisory message today which I will excerpt for you:
- Subj: Re: Compensation
- From: MKolk@sbc1.com (Michael Kolk)
Having worked with many closely held family businesses I can assure you that
your dilemma is not unique. Many family businesses are lost due to families
trying to support more overpaid family members that it is able. An effective
way to deal with the compensation problem is to set family members base
salaries at the same level it would be if you hired a non-relative. This
means having agreement at the beginning of the year as to the relative value
of each member s contribution. Additional bonus formula are tied to each
member based on their area of contribution to the business, relative
importance and business savvy in putting carrots in the right places. If
profits exceed these totals and sufficient profits have been left in to fund
future growth, the remaining earnings should be bonused out based on
ownership or prorata. jmkCPA
Tom s Comments: Family compensation is an extremely important area of
concern. In my travels I see MANY different conditions existing in print
shops. Here are some I have seen lately:
- 1. Sons and daughters not being paid nearly enough because they need to
sacrifice while the founder does little or nothing to improve the overall
plight of the company (such as sell something to someone).
- 2. Founders who overpay themselves, do little or not real work yet expect
all the other slovenly employees to work harder in order to make up for it.
- 3. Founder who overpays salaried salesperson son ($50,000) while business
loses cash and founder does not demand performance from son. Investor angel
friend of Dad saves Dad numerous times in the past but appears to be getting
short on patience.
- 4. Husband and wife founder team paying themselves a modest amount
($15,000/year total) while not doing what is necessary to make the business a
success. (They should get a real job.)
- 5. Founder who scarifices himself on the pay scale while overpaying most
everyone else. Why? Founder doesn t know anything about printing and thus
finds himself being held hostage by employees.
- 6. And, of course, the many cases as referred to in the message above where
family members are overpaid probably because the founder wants to BE FAIR.
Here are some rules:
- 1. No one, regardless of relationship to the founder, deserves a job because
of that relationship. That even includes the founder. Just because someone
has the bright idea to go into business fifteen years ago, does not mean the
person doesn t have to do real work to keep the business going. Likewise,
sons, daughters and spouses neither deserve jobs just because they are
related. Everyone who is hired must work.
- 2. Compensation for the work performed should be based exclusively on the
what would have to be paid in an arms length transaction. There are many
ways to determine this. One of the better ones is compensation surveys by
associations (NAQP or local PIA-affiliates). Others: do you own survey among
non-competing printers; get statistics from local employment service agency
(who happens to keep wage rates in some categories); or go to some employment
agencies trying to hire someone like your spouse and see what they say you
would have to pay. You get the idea. Those having additional ideas, email me
and I will pass them along to everyone.
- In short, I agree with Michael s comments above: An effective way to deal
with the compensation problem is to set family members base salaries at the
same level it would be if you hired a non-relative.
TRAVELOG: Will be in Ohio on an on-site on Monday and Tuesday, September
25-26th. Will be in the office on Wednesday, September 27th. Call (304)
342-5100 if you d like to chat. And Thursday - Friday will be doing work in
Florida. The staff at Crouser & Associates is, of course, here from 9 til 5,
Monday through Friday. Feel free to call at anytime.
Happy Trails... Tom Crouser
Crouser & Associates Performance Group program includes two on-site evaluations
by Tom Crouser each year along with two group meetings. Management training is held during the group
meetings along with participation in a meeting with non-competing printers. Join others who have decided
to run their business instead of the business running them. Reply to by Email to
Tom Crouser for more detailed information or call Clark Workman
at (304) 342-5100. Or fax (304) 342-5187 or contact crouser@ibm.net.
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Tuesday, January 02, 1996 7:12:39