The Importance of Performance Evaluations for Family Businesses


Regular performance reviews provide a legitimate platform for assessing every employee, but the opportunity they provide to both complement and offer constructive advice is even more critical for family members.

Strong emotions and a shared history can make it difficult for family members to mentor, guide and even criticize each other, even when it is best for the employee and the company. The tendency to avoid confrontation, although based on the best intentions, can have serious side effects.

As a family business grows in scope and magnitude, becoming more sophisticated and complex, it is important for the family to embrace best practices that support the operations, management, financial, sales and marketing and human resources components. Ensuring that all employees, especially those who are family members, maximize their skills and continuously improve their effectiveness and efficiency is essential for the company’s future success and sustainability.

Sign Up for E-News

To accomplish this, the company should establish performance criteria and assessment methods that everyone adheres to within the organization. In this way, family members are not singled out, either for undeserved praise or punishment, and they benefit from following the same process as everyone else. They should be setting goals, establishing benchmarks and monitoring milestones, while being held accountable for achieving their objectives.

With this procedure in place, compensation and advancement can be merit-based, with proper documentation in place to support HR decisions. Regular check-ups can also help the family, minimizing ‘surprises’ and creating a fair measurement standard for all.

Some simple steps to make the performance evaluation process easier for family members include:

  • Provide a written job description. This is the first and most basic step necessary to navigate along a career path.
  • Establish specific measurements for performance, using metrics that help the employee understand hir/her own success and how they are contributing to the family business’ success. 
  • Determine what training will help the family member. To perform at peak levels, everyone needs access to the proper tools and resources.
  • Agree to meet regularly to track progress. Catching problems early can help mitigate end-of-year challenges that are more difficult to overcome once they have gotten out of hand. Feedback offered during these sessions must be reasonable and objective if the employ is going to make a positive impression and instigate cooperation and even change when necessary.
  • When changes do need to be made, collaborate and decide together how the family business member/employee can effectively implement the suggestions. Taking ownership over behavioral changes can lead to greater acceptance and commitment.

Every family member/employee should understand the value they add to the company through their interaction with staff, customers/clients, vendors, suppliers and the community. They can be more productive and useful when they have set goals and the tools to do the job well. They will also be more mindful of attaining their milestones and be more accepting of feedback when it is delivered with the intent to help them continuously improve.

Our conclusion is this: do not short change your family members by refusing to conduct performance evaluations. They will gain from the experience and so will the family business!

Some of the information used in this article was researched at

Ahola’s BreaktHRough. “What Your Family Owned Business Needs to Know About Compensation, Evaluation and Employment Policies.” “Performance Evaluation: Why Bother? For the Benefits!” “Performance Metrics: Work Not Measured Cannot Be Managed.”

Laura Rosen, CPA, works at Sobel & Co., LLC.

This column will provide business advice and new  perspectives on business news, emerging trends and traditional topics impacting individuals, family businesses and professional service providers across the tri-state area.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of or anyone who works for is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News


Nutley Police Make Arrest In Instagram School Threat Case

February 25, 2018

NUTLEY, NJ — The Nutley Police Department made an arrest in the case of an Instagram video post. An 18-year-old resident was charged with Third Degree False Public Alarm.

Joseph Rafanello, a senior at Nutley High School, was arrested and taken to Essex County Jail. The arrest followed a full investigation by the police.

Chief Thomas Strumolo stated that ...

How Do I Decide Which College to Attend?

Now that college acceptances are rolling in, how do I decide which to attend?

Your hard work in high school has paid off. You took your SAT/ACT exams, got the best grades you could, and filled out as many applications as you needed to. Acceptance letters are starting to come in and you need to make a decision on where you will go in the fall. It's hard to decide!! Here are some tips and ...

Shouts of Racial Slurs During "Black Panther" Bring Police to Sparta Theatre

February 21, 2018

SPARTA, NJ – Sparta police were called to the New Vision Sparta Theater on Sunday night because of a woman shouting slurs in a screening of Black Panther.

Former New Jersey Assembly candidate Michael Grace was in the theater when two people started yelling racial slurs including “look at these ‘n-word’” and “can you believe these ...

Upcoming Events


Sun, February 25, 1:00 PM

CycleBar, Livingston

Cycle Red for Heart Disease to Benefit Heart ...

Giving Back

Mon, February 26, 1:30 PM

Livingston Public Library, Livingston

Monday at the Movies: WILD OATS

Arts & Entertainment


Mon, February 26, 2:00 PM

Burnet Hill Elementary School, Livingston

Livingston Public Schools Presents: PRIDE Open ...


Can Frelinghuysen At Least Stand with Working Families On His Way Out?

February 25, 2018

On January 29, Congressman Rodney Frelinghuysen announced his decision to retire.  Presumably he is now free to vote his conscience rather than blindly go along with his party’s agenda against the interests of the working class in America.

On February 14, he voted to support a bill that allows usurious credit card rates to apply when loans are sold from one institution to another.

NJ Acting Health Commissioner Cites Inglemoor as Example of Best Practices in Flu Prevention

February 22, 2018

LIVINGSTON, NJ — With one of the worst flu seasons in recent history taking a daily toll across the nation, New Jersey Acting Health Commissioner Dr. Shereef Elnahal visited Inglemoor Rehabilitation and Care Center this week to meet residents and praise clinical staff for their success at keeping the flu at bay.

"There are best practices that Inglemoor has already implemented ...

Let the Games Begin

I am truly awed by the Olympics.  Watching these superb young athletes on TV inspires me to renew my membership to the gym and pursue my lifelong dream of taking home the gold.  


The problem is that in my deluded head, I can see actually see myself standing atop the podium.  I am wrapped in a puffy designer ski coat with a huge piece of bling slung around my neck ...