Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 4432 News & Views Magazine EDITION 1, 2016 Determining appropriate compensation for employees is tough enough, and even more so when some or all of your employees are family members. How can you most effectively determine a “fair” salary for all your employees in a family-owned business? To start, recognize that the intertwined topics of performance management and compensation are inherently problematic in family-owned businesses, since you’re never truly“away” from your work. Whenever and wherever family employees connect in or out of the workplace – in-person, online or by phone – there’s potential for questions or disagreements to arise over pay and performance. Some of the most common questions include: ■ How should family members’roles, titles and compensation be determined? ■ How should family members’performance be evaluated, especially compared with non-family members? ■ What’s the most appropriate way to recognize and reward both family and non-family members? ■ Should family members be paid a“market rate”or“family rate”salary? COMPENSATION GUIDELINES Rather than waiting for family employee questions like these to arise and potentially linger and fester, it’s much better to proactively communicate your performance and compensa- tion standards and principles to all employees. These could include some or all of the following: 1. Treat family member performance/compensation the same as for all employees – Don’t mistakenly think no one will mind if you pay family members substantially more or less than non-family members – someone will squawk. In word and deed, everything that you provide for family employees, including base pay, overtime, sick time, bonuses and benefits (including vacation time), should be equivalent. This step alone will resolve the majority of family/non-family employee compensation issues. The primary exception to this rule is if you employ a child under age 18. If so, consult with federal and state regulations regarding child labor laws and withholding and filing requirements. Lastly, if your spouse is a co-owner or owner of your business, consult with your tax advisor for recommendations regarding compensation and tax-related filing requirements. 2. Limit“compensation”to wages/benefits only – Related to the equivalency recommendation above, define employee “compensation”as wages/benefits only. Employee perks like gym/club memberships, free food and company freebies are great, but these benefits should be provided equally to all employees and not factored into your individual compensation calculations. 3. Use market standards to establish compensation – Base compensation levels for all roles on established industry standards, as reported in pay data surveys. Depending on your type of business, there are likely multiple sources available for salary data information, including from salary with Family Wages Being Fair