Before mixing business and family, do your homework first.
By Patrick Burke
It’s common for business owners to hire family members. In fact, according to the U.S. Census Bureau, about 90 percent of America’s businesses are family owned or controlled. And while many are small mom-and-pop operations or entrepreneurial start-ups, others, like Berkshire Hathaway and Walmart, are global giants.
Still, mixing business and family isn’t a shoo-in for success. One entrepreneur warns of “the good, the bad, and the ugly.” And another goes as far as to say you should “never hire a family member.”
A whole nother story
Over my 30 years in business, I’ve hired all three of my children, as well as 15 nieces and nephews, with almost universally positive results. In each case, however, the job was either a part-time or summer position, with no real consequential commitment.
But what about bringing family on board for full-time, long-term positions? Well, that’s a whole nother story.
Before making the leap, do your homework first. Consider three crucial pros and cons of hiring family members, and the solutions for handling them wisely up front.
Pros
1. They know the business.
Odds are your family’s been exposed to your business in some way, shape, or form. As a result, unlike non-family members, they can generally get up to speed faster and wear many different hats — adding more value earlier. This may be especially true of your children, who as “chips off the old block,” grew up with the business, whether hands-on or at the kitchen table.
2. They’re loyal.
People tend to have a deeper sense of loyalty when working for a relative. Knowing that your family members will stand by you through thick and thin provides a kind of trust and confidence that money can’t buy. Moreover, in tough economic times, they may be more willing than non-family members to stay the course, even when asked to do more with less.
3. They’re a known quantity.
As the old adage goes, “Better the devil you know than the devil you don’t.” Before a family member even starts working with you, you’ve got a good sense of their strengths and weaknesses, as well as their temperament. You can assign tasks and teammates accordingly, and have peace of mind that there’ll be few surprises. With non-family members, no amount of interviewing, testing, or reference checking can preclude the occasional shocker.
Cons
1. They may take advantage.
It’s not uncommon for family members to think that they can take advantage of their status. They may assume that you’ll turn a blind eye to bad behavior or poor work performance, or believe that no matter what, you won’t fire them. Some may even expect you to hire or retain them as a way to heal their demons, such as substance abuse or addiction.
2. They take business home — and vice-versa.
You’ve probably heard the Las Vegas slogan, “What happens in Vegas, stays in Vegas.” And the same should go with your business. But when family members are involved, the lines can get blurred, sometimes with negative consequences. Say your cousin, who’s your trusted office confidant, innocently spills the beans on a business secret at the family reunion. Or your daughter’s ex-husband, one of your top producers, crosses her and she asks you to get rid of him. Such thorny problems happen more than you may think.
3. They cause cries of nepotism.
In employing family members, you run the risk of other, non-family employees decrying it as nepotism. Even if it’s not true, and it’s just perceived as nepotism, it’s still a problem. And things only intensify when family members perform well and legitimately earn recognition and rewards. Some people will inevitably see it as “favoritism,” which often fans the flames of gossip, anger, and resentment among the ranks.
Solutions
1. Raise the bar.
Before offering a job to any family member, make your expectations clear: The status quo won’t do. You expect them not to meet company standards, but to exceed them. Think of it as a sort of reverse nepotism. Sooner or later, non-family employees will see that the bar is even higher for family.
2. Have a trial period.
Before making things permanent, hire family members on a trial basis first. Such preliminary employment periods — whether summer jobs, project positions, or paid internships — can be invaluable win-wins. With no strings attached, everyone involved gets a dry run — you, your family members, and your non-family employees who’ll have to work with them.
3. Make a legally valid contract.
When hiring family members, always put things in writing — not with a casual memo or email, but more formally, with a legally valid employment contract. This should spell out rights, responsibilities, and agreements such as compensation and benefits. But there’s no need for a long, convoluted document or bewildering legalese; in fact, such terms and conditions are best expressed in simple, everyday English.
So before mixing business and family, do your homework first. Consider the pros and cons, and how to handle them up front. This way, you’ll be safe not sorry — and what business owner doesn’t want that?
