Any negotiation can create resentment if not presented in the proper fashion. That's why Kathleen Misturak-Gingrich, a partner in the Philadelphia law firm Manta and Welge, insists all parties in the agreement understand the contract is intended to protect everyone. "I encourage the parties to talk about what each wants and what concerns them, and to think through what they want to accomplish in the business," she says.
Some advisors encourage the family member and the company, whether represented by a management team or the senior generation, to put in writing the provisions most important to them. Even if the provisions are revised during the negotiation, at least the parties have had an opportunity to explain what they're after and be acknowledged and understood.
While it's wise to include a re-negotiation clause in the employment contract, the re-negotiation itself may never need to take place. "At some point, if the family member is productive and motivated and wins the respect and admiration of senior management, the formal employment contract might be put in a drawer and deemed irrelevant," says Wolfson.
Until that point, however, written contracts can head off or minimize the dissension and bickering that have wrecked many a family business.
California Family Business Institute, (800) 952-CFBI, http://www.cfbi.com
Grand Warehouse Corp., 4350 W. Ohio, Chicago, IL 60624, (773) 265-0403
Kathleen Misturak-Gingrich, c/o Manta and Welge, 2000 Market St., 6th Fl., Philadelphia, PA 19103, (215) 851-6626
Jeffrey Wolfson, c/o Goulston & Storrs, 400 Atlantic Ave., Boston, MA 02110