How Family Businesses Can Retain Its Best Employees


Managing your employees wisely

In today’s specialized knowledge and skill-based economy, it has become increasingly important for companies to recruit and maintain a top-notch workforce. Without a talented and motivated pool of employees, a business will struggle to have the success it set out to have.

This is particularly important for family firms because they often run businesses that span multiple generations by passing down specialized skills and practices. Because its employees are inevitably integral in the transfer and advancement of these specialized skills, the family business has much to lose when it experiences high turnover, particularly among its family members.

In the family business, an employee’s level of job satisfaction and its effect on turnover can be measured by three key criteria: Family business embeddedness, superior job alternatives, and work centrality.

Family business embeddedness is defined as the convergence of values and objectives stemming from the family and the business. High levels of family business embeddedness increased family employee’s sense of job satisfaction and reduced turnover.

Work centrality measures the extent to which work is a dominant value in an employee’s value system, and not simply a way for him or her to make a living. High levels of work centrality increased the family employees’ sense of job satisfaction and reduced turnover.

Superior job alternatives outside the family business refer to perceived benefits such as greater salary, faster promotion, higher compensation, and superior opportunities in other places of employment. Superior job alternatives reduced family employees’ sense of job satisfaction, and increased turnover.

This research ultimately shows us that family businesses will do well to increase levels of family business embeddedness and work centrality, and provide greater incentives in order to retain and grow their workforce. In an ever-shrinking pool of high-skilled workers, family businesses must stay nimble and versatile in order to prevent a damaging brain drain from its greatest resource, the human capital.


Based on the Research Paper “How to Increase Job Satisfaction and Reduce Turnover Intentions in the Family Firm: The Family – Business Embeddedness Perspective”, by Dmitry KhaninOfir Turel, and Raj V. Mahto.

Dmitry Khanin, Nazarbayev University, Kazakhstan

Raj V.Mahto, University of New Mexico, USA

Ofir Turel, California State University, Fullerton, USA