6 Steps to Take When Hiring Family or Friends in Business

If you're going to hire them, it needs to be okay to fire them.

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Follow guidelines below when hiring family into your business. Hero Images/Getty Images

When it comes to hiring family members, rarely do owners assess the skills of the family member in the same way as those of an outside employee. Also, rarely, do the outside employees feel they are being treated the same way the family employees are. As a result, everyone’s stress level and dissatisfaction increases.

I understand this from the inside as my husband and I have worked together in our many different businesses.

Like most family businesses, we each do what needs to be done in order for the business to succeed. Some days I am preparing a business plan for a bank line of credit and other days I am taking out the trash. My husband is also a dental implant dentist and a sole practitioner.  I have always been involved in the business management of the company. Occasionally, I have stepped in to work at the front desk. A few years ago, the occasion lasted several months.

On the days I had to do this job, I would get up, look in the mirror, and tell myself that I would make every patient a happy patient. I would get through the day and come home exhausted. The reason – I was doing a job that I really did not want to be doing and which did not suit my personality (I am an attorney by profession). I did it because it had to be done. I was very relieved and thrilled when my replacement was hired and I was fired.

 

Family businesses are just that – businesses owned and run by families. These-family owned business experience all the issues of all other types of businesses with the added layer of stress that the family dynamics bring. If you successfully work through these dynamics, a family owned business can provide retirement security for many generations.

Most often those starting the enterprise do everything in the business from sweeping the floors to prepping the financials. Eventually, they bring on additional employees and often other family members and begin to create specializations. When this point arrives, it is time to begin treating the business as a business. Doing so will help avoid the stressful dynamics that can occur when too much of the family dynamics creep in.

Here are a six steps to hiring family in a family owned business.

  1.  Create a job description for each position. List the skills and education required for each.  Make sure the family candidates you select to fill these positions have the required skills and education. Hiring your son or daughter to do a job they are not prepared for sets both your business and your child up for failure. Instead, let them know what skills they need to acquire in order to get the job they want.
  2. Assess the personality type required to fill a position and make sure the family candidate has the correct personality. Everyone can do something unsuitable for a short time but doing so for an extended period can spell disaster for the individual and the business.  Think how unhappy a social butterfly would be stuck in a warehouse alone stacking boxes. Chances are he would be on the phone texting his friends any chance he got.
  1. Create a pay range for each position and stick to it regardless of whether the position is held by an outsider or a family member. Paying family members more for the same work creates disgruntled outside employees. Don’t assume the pay is a secret. Somehow, at some point in time, someone will figure it out.
  2. Review family employees using the same standards you do for all employees. Schedule these reviews regularly. Point out the good, the areas that need improvement and set goals to be met.
  3. If your children intend to be a part of the family business for a substantial portion of their careers, insist that they work for a company not owned by you or another family member.  The experience they will gain working for someone else help them better appreciate the benefits of working for family and will add new ideas and insights to the family business.
  1. Separate business from family. Set boundaries as to when and where business will be discussed. A quick question at a family birthday party is completely acceptable; a marketing planning meeting at Thanksgiving dinner is not. Family members need to know that they can enjoy family events without constantly being on call.

Firing anyone is rarely easy and firing a family member is the hardest of all.  Remember, your business is a business and it is your asset. If you don’t think you will be able to fire your family then you should not hire them to begin with. My husband fired me – twice.

This article comes to us courtesy of Oksana Komarnyckyj  Oksana is a Managing Director with CKS Advisors LLC, a company focused on creating value for businesses and their owners all while enhancing harmony among stakeholders, especially in preparation for transitions, including sales, acquisitions, generational shifts or capital infusion.  

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