Situation: The CEO of a family business faces his most difficult conversation. One brother, who makes more than anyone else, is not living up to his responsibilities. A long-term key employee currently handles most of this brother’s responsibilities at a modest salary. The CEO is intimidated by this task. How do you prepare for a difficult conversation?

Advice from the CEOs:

• Call a meeting of the three brothers and the key employee. Propose putting all four into a pool. The key employee is treated like a brother. Ask: what is a fair way to split the pie and to build incentives so that each makes what their father, who built the company, made? Make it clear that all four members of the team want the same earning potential and that one team member is not more equal than the others.
  • Prepare and script this meeting ahead of time.
  • Don’t allow the under-performing brother to play the others off against each other.
  • Know what must be said if this brother says he will leave.
• The CEO must stick with the message. If the underperformer doesn’t like the message, he is not indispensable. A replacement could be hired for far less than he is currently being paid.
• What are the key points for the conversation?
  • Turn the question around – the brothers all joined a company model that no longer works – the three brothers, combined, make less than their father made.
  • Ask the underperformer – what are the proper incentives? What is fair? Is it fair that for years, he has made more than anyone else?
  • It’s time for each member of the team to work together to figure out how to make what their father made in this business.
  • The brothers have supported the underperforming brother for years. Any old debts that were owed have been paid.
  • Ask the underperforming brother for his voice in how to expand the company and make it more profitable.
  • This is a new game. If all members pull together everybody wins.

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