fire. In the long run, it may be more beneficial to help an unemployed family member by providing financial support for professional career counseling, job placement assistance or even a personal loan while he or she seeks a job outside the agency that better suits his or her skills. Written employment agreements To minimize problems that may arise, agency owners should document all business agreements. Shareholder agreements should clearly address the buying and selling of shares, limitations on the sale of stock, the company’s dividend policy, mandatory retirement age, liability of shareholders, lines and limits of authority, compensation of owners, and other important issues. The agency should have a standard producer employment agreement that includes a non-piracy provision and a standard producer compensation addendum. Producers should be placed on a draw against variable compensation based on the production and retention of the
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accounts they service. This should apply to all producers, regardless their relationship to the family. The agency should also have job descriptions with clear duties, responsibilities and reporting relationships for all employees. Criteria to determine compensation Many employees feel underpaid regardless of their employers. In a family-owned agency, the complaints about compensation may be more personal. Comments, such as: “Uncle George produces half what I do and he gets paid more than me,” can result if the agency does not adopt an objective criteria for compensation decisions. Industry data is a good starting point for determining salary ranges for non-sales positions. Aligning pay with job descriptions recognizes the value the industry puts on specific positions. For production-related positions, the commission splits paid to employees for new business produced and for renewal business serviced should be the same, regardless of their role
within the family. Determine profit distributions for owners based on their respective ownership percentages. By creating a system where it’s clear that compensation is linked to objective criteria, you can reduce the potential for misunderstandings or hard feelings among family members, owners or other employees. Code of conduct A key challenge for owners of a family-owned agency is keeping family issues outside the doors of the agency. Quarrels and ill feelings among relatives must not affect the work environment. Bickering and quarrels can damage productivity and create an uncomfortable emotional atmosphere that can lead to undesired turnover and poor overall agency performance. As the owner or manager, it is important to make it clear to all employee family members that their interests will be best served by a profitable, growing agency that is free from rumor mongering, politicking or allegiances to one family member or