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University of Massachusetts Amherst

Family Business Center

How to Hire Well and Stay OUT of Court

by Shel Horowitz

Once upon a time, not so very long ago, hiring and firing were relatively simple matters. You interviewed a few candidates, selected one, and if it didn't work out, you gave notice.

Try that informal approach today and you'll likely land in court. Personnel has become human resources, and standards must be followed for hiring, evaluation, termination, even letters of reference.

Dr. Jane Giacobbe-Miller of the University of Massachusetts outlined one workable approach in her presentation to the Family Business Center October 17 at the Log Cabin (great view from the top during foliage season!). She addressed five aspects of human resources systems: job analysis, job descriptions, staffing, performance standards, and, the big bugaboo, compensation.

If the goal is to attract, retain, and motivate employees, you want to create a climate of fairness and consistency - both real and perceived. You want to offer competitive pay and the chance for significant advancement, especially in a seller's market. You want your employees to know your key goals. And of course, you want to comply with all applicable laws: on civil rights, wages, taxes.

And you want to make sure your policies support those goals. In Giacobbe-Miller's words, "Don't reward 'A' [behavior] while hoping for 'B.'" For instance, if you pay more to those supervising more workers, managers may "turf-build."

To carry these goals out, you have to first analyze each position. Giacobbe-Miller believes in using a combination of questionnaires, observation, and interviews - with review by both the job holder and the supervisor. She doesn't like having employees keep detailed time logs, unless the position is out in the field, or so murky that no one really understands what the person actually does.

From the analysis comes the formal job description, although she warns that these may become overly confining, especially in small organizations. She recommends designing jobs that advance both the organization's needs and the job-holder's particular skills and interests. Descriptions should include the title, supervisor, summary, ADA notice outlining reasonable accommodations, duties, responsibilities, qualifications, and working conditions.

Performance evaluations - particularly tricky when a non-family manager evaluates a family member - should be at least two-way (she actually recommends "360° appraisals," including customers, suppliers, subordinates, and supervisors) and continuous - not just at annual review time. Focusing on behaviors and outcomes can help move toward problem-solving. Again, consistency and fairness, not personalities, should drive the process.

As for pay: first, never assume your payscales are secret. second, use competency-based salaries, rather than family membership. Compensate family members additionally through their ownership, not through their salary. Among other benefits, if you replace a family member with an outsider, you won't be stuck with the artificially higher salary. Determine salaries through factoring specific points (objective and easy to monitor), skill-based plans (subjective, difficult to monitor, and requiring considerable testing), or external market demand - but note that there may be a very wide range of salaries with the same job titles at the upper end: differentials of $100,000 or more.

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