Family Compensation: You Can't Always be Equal and Fair

March 24, 2021 | Dan Beenken, Director of Advance Iowa

Dan Beenken, Director of Advance Iowa

Compensation is already a touchy subject and if you throw on top of that a heaping spoonful of working with your family, things can get messy real quick. 

Families often approach compensation with the best intentions of wanting to keep harmony. You might see equal pay as the best way forward to avoid sibling/cousin conflict.  Often what happens, like with so many other best-laid plans, is that your best intentions only serve to fuel divides and frustrations. 

It's critical to look at compensation in all of its various forms and remember that you can structure all of them differently, as long as you use standardization and communicate.

In regards to family compensation, the questions and topics to consider are seemingly endless. Who decides what family employee pay should be?  Does each family member make the same amount?  Do we pay our family more than an outside employee?  Do we compensate non-active family?  How are raises or promotions determined and by whom?  How do we handle family bonus pay?  Should we utilize a compensation survey, consultant, compensation committee, or other resources to give us some third-party validation? 

Our upcoming Breakfast Series session on March 26 will focus on the topic of compensation.  We will have both a compensation consultant and a family business on our panel giving their viewpoint and experience on how to navigate your family business through this area. 

In addition to these topics, we will talk about best practices in terms of keeping non-family employees engaged and motivated.  How do we hold on to executive talent as a family-owned business?  What do we use to motivate them when ownership isn’t on the table? 

We’ll cover a wide array of compensation tools and strategies with examples and detail, including:

  • Compensation surveys
  • Family bonus pools
  • Active vs Non-Active family compensation
  • Job descriptions for family employees
  • Compensation committees

We’d love to have your family as a member of the Iowa Family Business Center.  For more information and to register, please visit us at: or call us at 319-273-IOWA.