Compensation Consulting for Family Businesses
Compensation often emerges as an unexpected pain point during family business leadership transitions. Current leaders – who may not have had to hire an executive-level employee in decades – commonly struggle to develop executive compensation packages that attract top talent and align with ownership values.
If your family business is struggling to understand where the market is or needs support navigating sensitive conversations about salaries and benefits with family members and employees, Stranberg can help. Our compensation consulting service helps family businesses make informed, strategic decisions about executive pay – and ensures alignment between leadership, performance and long-term success.
Why Getting Compensation Right Matters
Leadership transitions are pivotal moments for family businesses. The wrong placement can sow chaos – and expose the organization and family to financial and reputational risk. Regardless of whether the successor comes from within the family or outside of it, it’s the business owner’s responsibility to appoint the leader who is best qualified for the role.
Unfortunately, attracting the best-qualified candidate can feel like an uphill battle, especially if compensation falls below market standards. To entice top performers, compensation must be competitive and informed by market data – which means the rate may not necessarily align with the current compensation policy.
In addition to attracting the right people, a competitive compensation package is a powerful tool that family businesses can use to establish expectations and set milestones for their new placement. Structured bonus policies incentivize new leaders to meet performance goals – and allow them to demonstrate they are the right person for the job.
The Process
Here’s how Stranberg works with family businesses to design and implement competitive compensation packages:
Benchmarking
Data-driven benchmarks are the foundation of our compensation consulting service. We access multiple third-party data sets to identify trends in industry, region, function, and ownership. We compare this data against your practices to inform your compensation strategy.
Advising
Stranberg leverages benchmarking data to design an executive compensation plan that is tailored to your business’s vision and family ownership model. We draft a comprehensive report that includes the data and recommendations about base salary, incentives and long-term rewards.
Implementation
When a job offer is extended, Stranberg will help your family negotiate to ensure that your owners’ and the new executive’s expectations about compensation align. We advise on how to structure and enforce performance-based compensation to reinforce accountability and growth.
Our Data-Driven Approach
One of the primary mistakes family businesses make when it comes to compensation is relying on instinct to drive decisions about salaries, raises, bonuses and other incentives. To keep relationships from feeling transactional, many family businesses eschew formal compensation policies and resist looking at market data to establish up-to-date benchmarks.
While this behavior is often born from good intentions, the absence of data can lead to adverse outcomes – especially when hiring decisions reveal that long-term employees are compensated far below market rates.
Stranberg believes in the power of objectivity when it comes to pay, which is why every recommendation our team makes is driven by market data. This approach doesn’t just result in competitive compensation packages – it also ensures that offers are fair and based on numbers that can’t be fudged.
How to Get Started
Compensation is just one facet of CEO succession planning. A competitive salary and incentives package, alone, isn’t enough to attract and retain top talent – the responsibilities and objectives of the role must be clearly defined and agreed upon by family owners and other stakeholders.
Stranberg’s CEO succession planning service helps family businesses establish what the organization needs from its leadership team. Only once goals and expectations are defined, do we begin to search for who to hire through our executive search process. Regardless of whether your ideal candidate comes from within the family or outside of it, we identify and help you vet the most qualified candidates and streamline the inboarding/onboarding process.
Are You Ready to Hire?
Find out if you’re ready to hire a family or non-family executive to fill your open CEO or other leadership role by completing our free, online succession planning assessment.
Completing the assessment will help you clarify the requirements, goals and success factors before you embark on an executive search and hiring process.
Contact a Stranberg succession planning expert to learn how our data-driven compensation consulting services can help you hire a successor who will empower your business to thrive for years to come.