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Hiring Family Members: The Pros, Cons & Best Practices

By Mariah Collins, SHRM-CP on Oct 04, 2022
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Small business owners often are in a position to consider hiring family members. Whether a relative asks for or expects a job, the tight labor market makes talent acquisition more challenging, or you just want to provide an opportunity for a child, it can be tempting. 

Following through on the hire might be a disaster that harms both your business and your family relationships – or it could turn out to be a great business decision. To make sure it’s the latter, weigh the following pros, cons and tips so you can make decisions that are best for everyone. 

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Table of Contents

1. Pros and Cons of Hiring Family Members

1.1 Pros

1.2 Cons

2. Expert Advice from a Family Business Consultant

 

Pros and Cons of Hiring Family Members

Pros:

1. Known Entity

With a family member, you probably have a better idea of what you’re getting. Unlike job candidates you’ve just met, chances are you’re familiar with your relative’s strengths and weaknesses. You already have a sense of their values, an established rapport and a level of trust. That likely means fewer on-the-job surprises such as discovering he or she is not a good fit or doesn’t have a strong work ethic. 

2. Invested in Business

Family members are more likely than newcomers to champion your business. Their drive for the company to succeed will be personal, as well as professional. Consequently, they may be more motivated, engaged and productive as a result – especially if it’s a child looking to move up and someday have an ownership role. 

3. Prior Knowledge

It’s likely a family member who comes on board already will have more familiarity with the business than a non-relative would. This preexisting knowledge can reduce the learning curve and help them make a greater impact faster. 

Cons: 

1. Lower Employee Morale

Hiring a relative – especially someone who doesn’t seem qualified for the job – may send the wrong message to existing employees. Your employees may resist it simply because they perceive the move as nepotism or because they believe it limits their own upward mobility in the company.

There’s also a risk of inadvertently showing favoritism by spending more time with your family member at your workplace than with other employees or prematurely granting him or her higher-level roles and responsibilities. Those actions could decrease overall employee morale, productivity and your ability to retain quality workers. 

2. Awkward to Manage

An advantage of hiring a relative – familiarity – is also a potential disadvantage. Family dynamics aren’t always pleasant.

Old hurts, grudges and differences of opinion can make it uncomfortable to effectively manage a family member, particularly if you need to discipline at some point. Small business owners in this position may avoid addressing these situations when they should for fear of damaging their personal relationships. 

3. Unmet Expectations

The surprises in this situation could go both ways: Owners might think they know what it will be like to work with a relative, when in reality – especially in stressful professional situations – the related employee may act differently than he or she does outside the office. And, if the employee is a child or another close relative, small business owners could assume the worker with family ties inherently understands the business and the job responsibilities without adequate direction.

Family member employees, on the other hand, may believe they will be treated differently – with more voice, leniency or access to leaders than other employees have – or that the rules don’t apply to them. 

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Expert Advice from a Family Business Consultant

Clearly, hiring a relative is not a decision to be taken lightly. Family Business Consultant Kyle Danner offers these tips for small business owners considering making a cousin, child or another relative a colleague: 

1. Commit to an Objective, Competitive Hiring Process

Make sure any family member you’re considering hiring has the right skill set and relevant background to qualify for the position. 

“If you hire your cousin because you owe him a favor, then you’re asking for trouble,” Danner says. “A relative who’s a poor match for an open position can end up costing you time and money – not to mention creating exceedingly uncomfortable moments sitting around the table come Thanksgiving.”

RELATED: Pre-Employment Personality Tests; Are They an Effective Tool? >> 

2. Take a Business-First Approach

Before hiring a family member:

  • Have a legitimate job opening; 

  • Consider a relative only if that person has the skills, experience and abilities required to perform the job well; and 

  • Interview several applicants, selecting the family member only if he or she is a justifiably strong candidate. Treat your choice as a business decision, not a family one. 

3. Set Expectations at the Outset

Make sure job descriptions clearly define the scope of responsibilities as well as the qualifications required of candidates. Have a conversation, as well, so the newly hired candidate understands your performance and attitudinal expectations.

4. Onboard Thoroughly

Onboard the family member as thoroughly as you would any other employee. If possible, make the relative accountable to a non-related manager, and trust the manager to handle mentoring, training and, as necessary, discipline.

RELATED: The Employee Learning Curve - Achieving Employee Development Success >>

5. Treat Related Employees the Same as Other Staff

This includes paying them consistently as others who are at the same level in the company. Hire relatives at market rate, not above, and handle raises and promotions according to company policy.

Like all professional decisions, it’s smart to weigh the pros and cons before choosing to hire a family member. Enacting, communicating and consistently following fair employment practices will help ensure that working with relatives works for your business.

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