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Sheffield business expert warns on family conflict over wages

Measures to prevent local family business members falling out over wages and putting an enterprise at risk have been put forward by a Sheffield-based specialist in the sector.

Family firms account for three quarters of the Sheffield region’s businesses but are vulnerable to family conflict when it comes to fixing a fair salaries system, says Richard Frost, managing partner of independent chartered accountants and business advisers Hawsons, of Glossop Road, Sheffield.

He said: “The difficulty is that business values and family values sometimes become mixed up, leading to a range of problems.

“If, for example, all family members are paid the same, some might become disgruntled and feel they are worth more because of their expertise.

“He or she may then leave, meaning the business loses his or her skills and is left with other members who may be overpaid and over promoted.”

Problems could also arise, he warned, over what the younger generation think about having to finance retired family members who may feel entitled to support in retirement because of their years of devotion to the company.

Frost, one of the first in the country to be awarded a postgraduate certificate in family business advice through the International Centre for Families in Business, recognises that deciding on an appropriate remuneration plan is not easy but says that, with careful thought, clear communication and open discussion, conflict over wages can be avoided so that all accept they are paid fairly.

One way forward, Frost suggests, would be to determine the family member’s role and then pay the market rate if he or she had to be replaced. There may also have to be adjustments for particular leadership skills, he adds.

This was posted in Bdaily's Members' News section by Mark Lane .