Why Should Perks Be Valued?
At the Northeast School for Agricultural Lending, an inquiring banker challenged me concerning why perks or fringe benefits should be listed in a work agreement and valued. The great question led to this column.
First, most family businesses have a very informal business structure for family members entering the business. It consists of living at home, minimal pay or pay as needed, and no spelled-out vacation or time off. The perk of being able to back up to the fuel tank as needed is often included as well. This type of structure is guaranteed to lead to communication, and sometimes self-esteem, problems for the family member.
First, the cash wage needs to be paid regularly with proper taxed deducted. Second, a listing of all perks needs to be spelled out, valued, and reviewed annually. It is important to have a third party place a value on all perks and present them on the pay stub.
The benefit of this is that it allows the family member to assess the opportunity cost of other job options on an objective basis. If not, family discussions can become heated, particularly if one family member feels they are getting the “short end of the stick.”
A formal agreement raises the level of professional business acumen that is necessary for many of our larger businesses.
I feel more like the Sky King this month than the Road Warrior, since I have spent so much time in airports lately. I think I could do without the cancelled flights! I’ll be staying busy in July teaching banking schools in Nebraska, Colorado, and Wisconsin, as well as speaking at seminars in Pennsylvania and Minnesota. Maybe I’ll see you during my travels!
My e-mail address is:firstname.lastname@example.org
Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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