Suggest to the senior generation of a family business that giving employment contracts to family members might be a wise idea, and you'll run into a minefield of resistance. "They're not necessary--we love and respect each other" or "It would run counter to our business's culture" are typical responses.
It's only after a problem flares up that some families realize employment contracts would be helpful. "Family businesses can never have too much communication," says Jeffrey Wolfson, partner in the Boston law firm Goulston & Storrs and chair of Northeastern University's Center for Family Business in Boston. "A document that provides important information--job and role definition for the family member and defined expectations and security for the company--can do nothing but improve communication."
Patricia Schiff Estess writes family business histories and is the author of two books, Managing Alternative Work Arrangements (Crisp Publishing) and Money Advice for Your Successful Remarriage (Betterway Press).