The pitfalls of hiring your family members
Business and family don’t mix, is the old wisdom. And I’ve certainly seen the mixture blow up in a bunch of instances, but what about the many many family businesses out there that have done very well and been around a long time. (and I’m not just talking about the Corleones or the Sopranos) Say what you will, but the Murdochs, Packers and Trumps are nothing if not successful business families. So why are we so concerned about introducing family members into our businesses, and how can we avoid the worst of the pitfalls of running our family business? The question: How can we make our family business work better? is one of the 7 Big Questions about building a beautiful business and life.
First of all, I think the problem with family and business, or for that matter friends and business, is not so much that it is more likely to fail than a normal business, but that if it fails it can cause so much collateral damage. Whole families can be ripped apart over a family business partnership that disintegrates. If the manager of department X turns out to be an incompetent idiot, you as his direct report can simply leave. It may be inconvenient, but you’ll find another job and life moves on. But if that same manager is uncle Jimmy and the company was started by your father, and you have to sit at the same Christmas lunch table with Uncle Jimmy next month, then the situation becomes much more complicated.
The business owner’s dream
I’m not going to sit here and tell you never to hire a family member into your business. Most business owners dream of having their children join the business and have the thing they created be a vehicle for bringing the family closer and making life more comfortable for the family. In my days as a builder I often imagined that it would be really nice to have one or all of my kids become involved in my business. It’s how we roll as business owners, and it’s one of the reasons, I believe business owners on average are happier people as a group more about business and happiness here.
So how do we minimise the inherent risks of causing major family dramas when getting the clan involved in The Business.
From everything I’ve seen over the years I think there are four principles to managing family business well:
- Acknowledge that it isn’t always going to be easy. Allow for the fact that just because we are family, doesn’t mean we all have the same values and beliefs or the same work ethic or for that matter the same priorities in life. Sure, family is important for most of us, but my own kids are still more important to me than uncle Jimmy’s kids.
- Depending on the size of the organisation, ensure you have regular meetings (monthly ideally) in which issues can be tabled and resolved. The format of the meetings is dependent on circumstances. If there are two family members in a large organisation, it’s probably a good idea for those two people to go and have a drink every month and compare notes. But if a significant number of the employees of a business are all part of your family, organise a once a month family meeting, in which irritations and grievances are aired and worked through.
- Take the time to set up job-role-descriptions and expectations for all employees in the business, but especially for the family members. There is nothing so destructive as a family member in a business who doesn’t actually know what is expected from him or her. Job descriptions, clarity about what constitutes “great work”, clarity on deliverables and KPIs… Take the trouble to set them up and hold people, family members especially, accountable to them.
- Ensure that there is great clarity about how people move up the ladder in the company. Family members especially must know that there is a quid pro quo: Not unless you deliver XYZ and you have proven to be good at your current role, will you be considered for promotion: Just because you are my son, doesn’t mean you will be promoted beyond what you proven yourself capable of.
I’ve written various other articles about the highs and lows of being in a family business here, as well as my own experiences in a family business here, and there is a page with family business resources on my website, and finally I have a page about the services I offer husband and wife family businesses here.
Involving your family in your business can destroy your family just as much as it can bring your family closer together and be an incredibly rewarding experience. Follow the four principles above and you give yourself the best opportunity to create the latter… I promise you.
Btw, if you want to be guided on how to make your family business work, I have created The Fun in Business Intensive program to make it safe for business owners like you to go on a great journey of change in their business, their family, and life. Click below to learn more!