The hazard of hiring friends or family

hiringfriendsIf you run a small business, you have more than likely dealt with this situation before — when is it okay to hire a friend or family member?  As you can imagine, most people recommend that you stay away from hiring or doing business with family members. The initial thought  is that it could potentially end up terrible and they typically want to avoid the situation all together.  Here are some points to think about:

Understand the situation

I understand the thinking behind the “avoid doing business with family at all cost” mindset. People are thinking that it is better to be safe than sorry. However, what if it is actually a good opportunity for your business? In other words, what if your business would benefit from having this individual as an employee? Could it possibly be a win-win for both parties?  In reality, each situation is unique. I personally prefer to approach each situation separately and take time to consider the potential risks and rewards.  A few questions to help understand the situation:

  1. Why does this family member want a job?
  2. Do you have a good relationship with this individual?
  3. What are the needs of your business and the abilities of your family member?
  4. What is the family member’s work ethic like?

Understand the risks

The reason people shy away from hiring friends and family members is because it could potentially be a disaster. In the worst case scenario, you could ultimately end up damaging your business as well as your personal life.  You could damage that relationship or lose it altogether.  Even if this person looks to be a perfect match for your business, you should really take the time to identify all of the potential risks associated with the decision.  A few possible scenarios:

  1. The hire causes resentment among other employees.
  2. You have to fire your friend or family member which causes problems in your personal life.

Understand the rewards

If you consider yourself to come from a good family, it is likely that you may not want to risk ruining any of the relationships. It is important to note, though, that most people miss the other side of the equation — more risk = more reward.  There are plenty of reasons you should hire great people. Here are a few additional possible benefits:

  1. You provide a family member with a job.
  2. Your business is better off because this person is actually a great employee.

Advantages

  • You already know many of the capabilities of your relatives and close friends. This will let you assign just the right tasks to each person, based on their individual strengths and weaknesses.
  • Friends and family may already be familiar with your company and how it works. You would not need to spend as much time training new employees with the aims of your company.
  • Hiring your children can also bring special advantages. Your company will have another capable employee, while your family will be earning extra money. There may also be tax advantages to hiring your children.
  • Family members and close friends enter a business agreement with you already possessing a strong commitment to you as an individual, and, most likely, to your company. Because of this, they may be more willing to work longer hours (such as evenings or weekends) when necessary.

Disadvantages

  • A friend or family member may take advantage of their status, knowing that it is more difficult to fire someone who is close to you.
  • Other employees may feel jealous when you hire a friend or family member, thinking it is favoritism. This may especially be the case when a family member or friend is given a promotion over a non-relative/friend.
  • Personal family problems or disagreements between friends may be brought to the workplace. This may make it uncomfortable for other employees and difficult for work to get done.
  • Problems in the work place may be brought home to the family. They may also influence your relationship with your friends.
  • It may be more difficult to create a necessary change in the workplace when it might negatively affect your friend or relative that works for you.

Possible solutions to the disadvantages

  • Only hire friends or relatives that you are sure are qualified for the position. Then you will not have to face firing an unqualified relative or friend.
  • Hire friends or family on a three month trial basis. Then, if you like they way they work and they like working for you, hire them on a permanent basis.
  • Make it very clear to friends and family that they will be treated the same as any other employee. Meaning that they could be fired just the same as other employees.
  • Have a written contract with each friend or relative that explains their duties and responsibilities to the company as well as their compensation. Having a written contract in place can ease tension and make their job less personal and more professional.

Are the rewards worth the risks?

At the end of the day, you have to weigh out the risks and rewards. This is ultimately up to you and your discretion. In my case, I have stayed away from hiring friends or family members.  There was one time and it did not turn out very well.  Luckily we are still friends.  However, as you can imagine, situations like that could just as easily go wrong.  When considering whether or not to hire a friend or family member, be sure to take the time to think things through. You will be happy you did regardless of the decision you end up making.