Hiring family and friends: Benefits and pitfalls

A common question that often surfaces is whether it is wise to hire family members or friends. Opinions are generally strong concerning this issue, and there seem to be as many on one side of the fence as the other. In many cultures business is largely based on relational lines — many even in the U.S. But no matter the culture, there are familiar reasons and principles that need to be kept in mind as you decide the issue for yourself.

Positive reasons

You know family members and friends better, so there are fewer surprises in terms of performance. You know what you’re getting. But don’t skimp on the normal interview and reference checking process. Other employees (and even the candidate, for that matter) need to see that you are trying to be as objective as possible.

It can be an efficient way to teach the next generation strong work ethics while they work under your eye. You may also be motivated as a small business owner to find out whether they have the wherewithal to take a leadership role someday.

Family members often share the same culture, history, loyalty, values and even humor.

People you know can more easily be hired to perform temporary tasks such as stocking shelves, packing shipments, or doing data entry, and often at lower risk and cost to the company.

Negative reasons

Most people can’t separate work and relational roles in their lives very effectively. Can you really be their boss between 8 and 5 but their friend after 5?

Existing family relationships could be hurt by employing a family member. Normal issues such as accountability, performance reviews, guidance and correction could be blown out of proportion with family. Few families are without some internal or intergenerational conflict, and that can be disastrous, or at minimum stressful, if it comes into the workplace.

Mixing work with relationship generally doesn’t work. If you fire someone you don’t know, you don’t ever have to talk to them again. But if you fire family, you’re both reminded of that experience for life. Imagine what next Christmas’ dinner will feel like?

Preferential treatment of family or friends usually has a negative effect on other employees. Any sign of favoritism or unequal treatment can cause resentment, lower morale, and can ruin the motivation of other employees.

A surprising large percentage of employee fraud and theft comes from those you think you can trust the most.

Principles for success

Hire because it will benefit the business, not just the person.

Hire for specific, predetermined skills, not for charity. What specific skills will the person bring to the company, and do those skills match a present company need? Be sure to give them a job title that is an accurate reflection of their contribution, and resist the tendency to inflate job titles of family members.

Don’t hire any family member or friend that you aren’t confident you can hold accountable, discipline, or even fire. If any of these potential actions send chills up your spine, or you know you would hesitate to act, then don’t do it.

Don’t hire a family member or friend that you have to personally supervise. If the person can’t work for and be supervised by another company manager, then don’t hire them. It is always best to let another manager do the interview and make the final hire decision.

If you want to bring in a family member in order for them to learn the necessary skills and knowledge to be a long-term contributor to the company, then hire them as a “trainee” for a defined period of time (e.g. one year maximum). During that time they must have clear criteria for performance, training, education, knowledge and skills to be gained, and are evaluated regularly. Better yet, have another supervisor manage and evaluate them.

Don’t overpay or underpay family members or friends. Both situations will only hurt the employee in the long-term.

Kent Wilson (PhD) is a business practitioner and nonprofit leadership specialist. After running companies for 30 years, he facilitates high-value CEO peer advisory groups and coaches each member with Vistage International in Colorado Springs. He can be reached at kent.wilson@vistage.com.