Over the last few years, your friends and especially family have watched you work the necessary long hours, including nights, weekends, and even holidays to ensure the business you started continues in its success. As they see your business grow, some of those same friends and relatives will begin to offer their assistance as an employee, contractor or even partner. Likewise, you may start to look at those close to you as possible assets and even heirs to your company. The classic proverb states, “Blood is thicker than water,” and sometimes it is also a smarter job hire. Unfortunately, sometimes it is not.
When to Hire Family Members – While strongly urging small business owners to exercise caution when hiring siblings and children in his article written for Business News Daily, real estate entrepreneur and business advisor Chris Prickett shares some of the benefits family members can offer to small companies. These include:
- Willingness to work long hours for low pay in exchange for job security and high financial returns in the long run.
- Due to the open communication which family members enjoy, a degree of nepotism allows for fewer policies regarding childcare, vacations and health insurance.
Hiring family members offers stable, established firms such as yours a method of steady, cautious growth and helps to avoid over-extension.
The Procedure for Hiring Family Members – In an article written for Inc. Magazine, business writer Carolyn M. Brown shares some valuable insight, especially for smaller businesses. Rather than relying upon fancy, expensive MBA programs to prepare your next of kin, allow him or her to work at a similar business; this instills confidence in your son or daughter while allowing him or her to make learning mistakes at a competitor’s expense.
Another important aspect of successfully hiring relatives is to be as tough and meticulous with them as you are with any other new hire. In his article discussing the benefits and drawbacks of nepotism, Prickett insists that business founders implement written employee policies and that relatives be held to the same standards as non-family members. In fact, hold family members accountable even more stringently than average employees in order to communicate fairness to the staff at large and to let your son or daughter know there will be no “easy rides.”
When to Avoid Hiring Family Members – Family businesses are notorious for falling apart when the founder passes on ownership to heirs. Demanding that an individual join your team simply because of who he or she is, regardless of ability and ambition, is a recipe for disaster. Brown states correctly that “The head of the [company]—has to [avoid] total thoughtless placement of family members within the company.” She also reminds founders not to ‘invent’ positions for relatives just so they can have a job. If your daughter or nephew is simply not a good choice for any position within your business, do not hire him or her. You can still assist your family financially by offering him or her equity in the business while avoiding introducing a poor match to the team.
Ultimately, Blood is Thicker than Water, but…it cannot be thicker than your company’s livelihood, and only you can determine whether your niece, who has an accounting degree from State University, will really be the right person to manage your income statements. In an article for IndustryWeek, Cary Smith, Founder and CEO of Big Ass Solutions (yes, that really IS the company’s name), shares this simple strategy: look for someone who has identifiable strong work ethic and drive, and you will be fine.
Aepiphanni’s Ian Erickson has been advising managers and clients in a wide spectrum of industries on the most effective strategy for several years. In the coming weeks, Ian will continue to discuss situations facing small businesses and how to turn challenges into opportunities.
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