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University of Massachusetts Amherst

Family Business Center

Attracting and Retaining Non-Family Employees

by Shel Horowitz

In a panel discussion at the Family Business Center's march 6 meeting, panelists with a wide spectrum of experience discussed the challenges and rewards of using nonfamily executives in a family business.

Richard Stebbins, president of BayBank Boston, moderated the panel, which also included Alan Glou, president of Alan Glou International, an executive search firm specializing in high-tech; Linda Brandeford, Director of Employee development for Northeast Extrusion, a family manufacturing business in Turners Falls, Melissa Barringer, professor at the University of Massachusetts School of Management, and Paul Lane, the non-family CEO and part-owner of Lusteron.

The discussion was more a series of observations than a linear talk, and each panelist's remarks were out of their own experience.

Some highlights:

Lane: “The trust and respect that the family gives to me enables me to carry out the company's goals and aims. I have honored this trust by a determination to enhance the value of the corporation.” To make a family work with an outside executive, Lane said, the family must firmly commit to the decision; otherwise, the executive-and the business-will be undermined.

Brandeford: “When everyone buys into the structure of performance appraisals and salary scales, everyone shows respect because it feels fair.” Her “open-book” company, with $18 million in sales and 67 employees, gave out $300,000 in employee bonuses last year.

Barringer: Nonfamily execs must have “satisfaction with the pay and with the job.” Companies that can't afford to pay competitively may offer other benefits.

Glou: “Recognition is very important-the more esteem you give, the better they perform. It's much cheaper to keep people than to pay me to replace them.”

Stebbins: Daniel O'Connell's Sons, in Holyoke, gives 1/3 of after-tax profits to its employees.

Space prevents a report on the full range of topics, but everyone got plenty of food for thought, on such issues as recruitment, management, compensation, and severance.

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