Hiring family? - Don't hire trouble

 
It's very tempting in family businesses to hire from within the family group whenever possible. It's not just a case of blood being thicker than water, or even of "better the devil you know than the devil you don't". It's often about wanting to get the preferred successor(s) involved so they can begin to get a handle on the business, the desire to help out a family member who can't get employment elsewhere, or to avoid a family argument. A host of pressures can be placed on you to take on someone because they are "family".

Family members can be just what you need in certain circumstances. At startup they might be the ones with the motivation to work hard and long for small returns to get the business established. Ongoing they might be valuable as part time help for your rush periods or when they are between jobs or on college breaks. And it's estimated that about half of all spouses play some part in a family business, from sharing management responsibilities, to doing the bookkeeping, to just helping out occasionally.

Nevertheless, for all the positives that can be argued for employing family, it's equally possible to argue the opposite side of the coin. Family loyalty is great when it's working but family feuds can be more bitter, divisive and ultimately harmful to the business than any worker-to-worker dispute could be. Employing family can create expectations about their future role in the business that may not be in line with what you had in mind when hiring them and the disappointment can rupture relationships. A family member can easily feel slighted if one of their relatives is given a pay increase or a promotion. And the decision to fire a family member is unlikely to be anything short of a major trauma.

For positions in the business that require expertise, talent, and real commitment, hiring family members whose only qualification is that they are family is not a businesslike approach.

The ramifications go way beyond the fact that hiring in a family member who can't demonstrate the requisite level of skill for their position will create immediate feelings of resentment among those employees who have won their position on the basis of merit. If you don't apply the same rules when hiring family members as you would to any other employee, you can find yourself with serious morale problems that are likely to effect productivity as well. So it makes sense when considering hiring a family member to put them through the same process you would an outsider - make them apply for the job, do an interview and go through the same induction any other employee would.

In some cases it may be better to resist the temptation to bring family direct from school or college straight into the family business and insist they do a period of work in another business where they are just another employee.

Working elsewhere provides family members with an education in how other companies think and operate and removes the safety net of family privilege so that when they do enter the family business they'll bring with them wider experience and more real life perspectives on working relationships. They may even decide that the family business is not what they want and that is a decision better made earlier than later.

When family members do come in to the business they should be treated as much as possible like other employees. Visible signs of favouritism will ruin morale. They'll have to understand that their relationship to the owner doesn't extend any special privileges during working hours. Like any other employee, a family member should have specific goals to accomplish and be given tasks with measurable outcomes. They'll need a clear description of their job and details of their responsibilities.

Where the family business is large enough to provide a career path through a number of roles, promotion up the ladder should only be on merit, the same as it would be for any non-family employee. That protects both your relationship with those other employees and the viability of your business - relatedness is no substitute for aptitude in keeping a business financial and competitive.

The potential for family relationships to inappropriately influence business decision making makes hiring, managing, and maybe having to fire relatives, one of the most difficult issues the family business owner faces. To approach it in anything less than the professional manner you would adopt in managing an outsider is to invite serious longer term problems for the business and maybe for family relationships as well.

Contact us

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Phone 04 920 0911

 

P.O. Box 30-545, Lower Hutt 5040

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