How should a multifamily office handle family members seeking employment within the family enterprise?
Use a written employment policy and apply job-related criteria consistently to every candidate. Separate employment decisions from ownership rights. Document conflicts, compensation, performance expectations, and procedures for ending employment.
Set a written process
Write the role description, required qualifications, reporting line, interview steps, and performance expectations before reviewing applications. Apply the same job-related standards to family and non-family candidates. U.S. equal employment laws prohibit decisions based on protected characteristics, including race, sex, religion, national origin, age, and disability. U.S. Equal Employment Opportunity Commission
Separate relationships from decisions
Require anyone with a personal or financial interest in the hiring decision to disclose that interest and recuse themselves. An independent director, committee, or human resources leader can oversee the process and document the reasons for the decision. The OECD corporate governance principles address independent judgment and conflicts of interest. OECD G20/OECD Principles of Corporate Governance
The more aligned you can design the compensation of investment managers, staff members, family members, and those that serve you, the less you will worry about the total cost of them because you can afford to be generous as long as there is a consistently high ROI.
Treat employment and ownership separately
Set compensation and working conditions for the role. Document ownership rights through the enterprise's governing agreements. Covered employees must receive applicable minimum wage and overtime protections under the Fair Labor Standards Act, subject to its rules and exemptions. U.S. Department of Labor, Fair Labor Standards Act
Use written reviews and an exit process
Set measurable duties, review performance on a regular schedule, and document material decisions. State how reassignment, discipline, resignation, and termination will be handled. Apply the same workplace rules to family and non-family employees, subject to applicable employment laws.
Related guides
- Family Governance With a Multifamily Office
- Multifamily Offices for Business Sellers: A Practical Guide
- Access to Alternatives Through an MFO: A Practical Guide for Families