It’s a difficult task but the rewards are well worth it

It seems like a good idea at first. You start a business and it begins to grow.
Before you know it, you have to hire someone to help you manage your company. During times of economic uncertainty and/or recovery, many people feel more comfortable hiring a family member, spouse, child, sibling, aunt, uncle or some other relative. The growth continues and you add an employee and then another one. Each new-hire is another family member, either through blood or marriage. Before you know it most of your upper management team is related to you in one way or another.

This scenario is a common occurrence. Of course, as the business grows, most of the non-management team tends to be un-related folks who come aboard as line or middle echelon employees.

Eventually you are faced with decisions that can create problems for your business and worse, for your family. With growth comes added responsibility for your family member employees. With added responsibility come new positions (either by title or accountability). Who gets promoted and how do you do it, who becomes the heir apparent to your position, and who gets what amount of shares and when. All these factors have to be handled in such a way so as to avoid family friction, or at least keep it to a minimum.

The first rule is: never promise anyone anything of major significance, until you have time to assess his or her capabilities. You may even want to frame this statute and hang it somewhere in your office.

This is a tough declaration, especially when dealing with family. Items of major significance include such things as: ascension to a higher position, numbers of shares in the company, considerable pay raises, and larger benefit packages. The tendency for most people is to want their family members to feel comfortable and happy as part of the organization. Therefore, most owners tend to overcompensate or compensate too early in the company’s history and thus have the wrong family member in the wrong position (both on the organizational/responsibility chart and ownership/share wise) and often have that person or persons making a disproportionate amount of money for the position.

When promises are extended to family members, it is difficult to retract them without some discord. While you can fire anyone in your business, you can’t fire your family. They will always be related to you.

The most effective means of alleviating potential problems is to be honest with everyone involved, including yourself. As much as you may want to protect you children, spouse, siblings and other relatives, you must understand that if the business doesn’t flourish
no one in your family will prosper from it.

As with any person that you would hire, make sure you go over all the rules, policies, expectations, responsibilities and accountabilities of the position your relative will be holding within the organization. Do this before you actually add the person to your payroll. Be clear when emphasizing your position in relationship to his or hers. It is imperative that everyone involved understands that relationships inside the company are separate and distinct from those outside of it.

The same contracts that you would have other employees sign should hold true for your employee/relatives. Don’t bend on this. It can come back to haunt you and the other members of your clan. Using the phrase, “It’s only business,” will help. Explain your reasons. Be straightforward with reference to your fears about the damage that can occur to business and family relationships. Be firm when discussing the adult nature of the situation. And reiterate those points during business meetings that include your family members.

Once everyone understands the seriousness of the situation and your reasons for outlining the potential problems and benefits, they will hold each other accountable. This will help if problems surface at a later date.

Years ago my son held a part-time position in a company that I owned. When he started, I sat him down and told him that before work and after work I was his dad. But during work I was his boss, and while we worked with each other he would have to follow the same rules and accountabilities as everyone else. He also had a manager (who was not me) whose directions he had to adhere to and follow. Scheduling was up to the manager, not me. I would not accept any circumvention of the chain of command. I made sure that he understood that there were also other employees who were senior to him and who he should look towards for information as well. No promises were made as to succession, ownership, etc. The manager was made aware of my conversation with my son.

Obviously, as time progresses one begins to understand the strengths and weaknesses of everyone working within the organization. When you have clear delineation of policies and position descriptions, it is much easier to deal with family members in a non-emotional manner. Take time in evaluating your relative’s performance. Meet with him or her on a scheduled basis (as you would with any employee) to monitor their progress. And be pro-active rather than re-active by using constructive criticism in your evaluation of their performance.

It is naive to assume that most business owners will not eventually give preferential treatment to family members. However, those situations must never be in areas that will bring down the morale of other employees.

Other employees are aware of what it means to have family members of the owner as co-workers. Being fair and even-handed in your dealings with your employees, including your relatives, will create an atmosphere of teamwork, and make it easier to motivate everyone towards a common goal.

During periods of economic recovery and/or uncertainty people tend to over react to situations that may otherwise be minimized. By setting the rules up front with all your employees, including your family members, and taking your time when evaluating personnel decisions, you lower your risk of problems within your business and your family.