Family Office – Retaining Talent
Retaining people once they have been recruited depends heavily on compensation and the feedback process.
Conversations. The feedback process should be performance-based, consistent, and incorporate an element of long-term compensation.
Incentives can include items such as phantom stock (future cash payment based on market value of shares), co-investment opportunities, transaction bonuses and, in some cases, partnerships. Incentive plans often reflect the standards in the industry that created the family’s wealth, so packages vary by industry.
A common challenge faced by family offices when hiring staff is properly communicating to employees the opportunity, or lack thereof, for substantial career advancement in terms of expanded responsibilities and challenges. Most family offices are not created with the express purpose of growing in size and complexity – aside from meeting the needs of an expanding family member base. While this is less the case for new family offices, where the immediate goal is to establish an infrastructure for the proper management and governance of the family’s affairs, it is true for more established and mature family offices. In these cases, hiring decisions need to consider the longer-term roles and responsibilities of executives and staff at all levels. This challenge is particularly pronounced when hiring younger professionals who aspire to learn and take on greater responsibility, but less of a challenge for administrative staff and for professionals looking for a career with a family office to provide them with a better work-life balance. It is also less of an issue when hiring senior people for the family office leadership, since candidates are usually seasoned professionals who have already accomplished many of their career goals and view working with a family office as an opportunity to provide the family with these experiences as a final chapter in their career. It is critical to focus on and understand the longerterm career interests and motivations of each new family office hire when interviewing candidates.
Many family office executives were previously employed somewhere with a highly structured corporate environment and can feel uncertain about their performance and the family’s satisfaction with their role due to a lack of meaningful feedback. Family members may be unaccustomed to having to satisfy this need for feedback, but attempts should be made to provide a fair and thorough assessment of performance where possible. CEOs at family offices often feel unimportant, largely because of a lack of feedback, rather than concern over compensation.
A challenge when staffing a family office is how family office executives and family members can maintain a sense of partnership without the impartiality of the executive being affected by the family. Family office executives must be open to giving and receiving feedback so that an environment of honesty and openness can flourish. This process of feedback is in itself dependent on long-term commitment to the family, cultivated by appropriate incentive planning and personal chemistry – an unquantifiable element in the process.
Fort further information contact us directly.