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Family Business: Tough Love

Some thoughts on how to craft a family-employment policy, and how to order a free two-page outline on the same topic.
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Every entrepreneur has heard stories of family businesses that crumbled under the weight of nepotism. Twins Bob and Dave Asch didn't just make a mental note of the trend; in 1981 they crafted a family-employment policy to ensure the survival of their then nine-year-old company, Twincraft Soap, in Winooski, Vt.

That "tough love" policy is a model for founders whose children have the desire and the talent to join the business. The Asch brothers' principle is "No protectionism or undue privileges," and they back it up by putting critical decisions to nonfamily managers. Twincraft's 85 employees applaud the policy. Here are the highlights:

A previous-experience proviso. Beyond the college sheepskin, children must "receive initial training and get experience for at least two to three years in an outside industry if they expect to be considered for a position with a good future in the company," says Dave Asch.

Impartial interviews. Job candidates are judged on merit and motivation. After going through psychological and other preemployment tests, Asch relatives interview for permanent slots with nonfamily members of the executive committee, a group comprising the company's five department heads. The decision to hire someone must be unanimous. Candidates from the family get the nod over equally qualified outsiders, Dave says, but "favoritism ends right there."

Equitable advancement and pay. Offspring spar for promotions as they would at any other company, and there's no guarantee they'll ever become top brass. When they perform well, their salary increases mirror those of nonfamily members and are set by immediate superiors, excluding kin.

Outside management development. To step in as a manager, a child must have worked for several years in a comparable management position at another company.

So far only two of the twins' eight children have signed on -- testimony, in this case, to the founders' ability to match their tough words with tough action. "They don't play favorites," says manufacturing manager Jean-Marie Richard, who was wholeheartedly supported by the founders when he fired a family member for chronic tardiness.

That makes the successes of family members genuine. Bob's son Peter, 34, worked as a door-to-door salesman and began a student division for Electrolux Canada to gain experience. After three years with Twincraft Peter became the company's president. -- Karen E. Carney

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For a free two-page outline of criteria concerning the entry of children into the family business, fax a request on letterhead to Steve Swartz (612-376-9876) at the Family Business Group of the accounting firm of McGladrey & Pullen in Minneapolis. Also see last month's feature "Pass It On" ( [Article link]) for one company's succession struggle.

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Last updated: Sep 1, 1994




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