IN Asia, family-owned businesses are still the most dominant organization in all of the emerging and developed economies with the exception of China. For visionaries and business owners, the creation of a startup business is very much like having a child. You begin with a simple idea and labor to bring it into reality, then dedicate a lifetime to nurturing your creation and helping it grow and flourish. And when the time comes to pass on the baton, succession and leadership takes root with the entry of committed, passionate and skilled next generation family members. What I described is the ideal life cycle of a family business that is focused on stewardship and legacy. Unfortunately, this “ideal life cycle” represents a measly five percent in our current portfolio of family clients in Asia. The rest are struggling.Too often, parents/founders find themselves in a difficult position, trying to balance growth with efforts to create the right environment where the children are provided the right compensation package. This is where many leaders are in a bind. And herein lie the complications!As the business shifts to the next generation (multi-family) phase, more problems are magnified! The business suddenly experiences different stakeholders having varying needs and expectations. These stakeholders (family members) may be active (working in the business) and passive. Some have families and others are just starting. As to the way the business compensates these stakeholders, older members would expect better returns on their investments so they can partake of a good dividend policy, others prefer incentives and profit sharing, while some may just want higher compensation. Family circumstances (marital status, number of children, lifestyle and in-law influence) can add to this complication and growing differences in the way the business moves forward.This is what sets a “Family Business” from a regular business enterprise. When the pay structure of family members remains unclear, undefined and not explained thoroughly, the emotional element can manifest in the form of jealousy, rivalry and conflict. How should leaders pursue the right compensation plan? I am sharing a list of “Must-Do’s” to get the family started on the path to embracing compensation best practices.a. Why do we need to create a pay structure? What are the objectives? Which model should we employ? Is it industry and market driven? Will it be a combination of fixed and variable pay? When should the new structure be initiated? How can this be cascaded to the children? Should this proposed plan include non-family executives?b. When the family commences work on its Family Constitution, it is strongly recommended that the proposed plan be initiated and assigned to the Family Council. Crafting the plan is a top priority and must be urgently addressedc. To family firms with existing family agreements, we encourage the activation of the family council and the setting up of an ad hoc committee to plan the compensation mechanics with the help of a seasoned advisord. Those without family agreements in place but with an active board, we encourage the inclusion of the Family Compensation Plan in the agenda in the next board meeting. To make the plan impartial, I encourage members of the Board to set up a remuneration committee comprising independent directors and an advisor so they can objectively recommend the right structure.e. For many traditional families with no working board and no family constitution, their best option is to hire an advisor who can help craft a pay for performance model and support it with data culled from industry informationf. For family businesses employing multi-generational families, we usually assign and appoint a dedicated family member and a senior non-family executive to provide oversight in the implementationFinally, for business leaders that have no intention to embrace change and institutionalize pay for performance amongst the next generation members, you will need a lot of prayers and divine intervention to navigate the perilous journey of succession.