Family Business Hiring Policies

One of the best things about being a business owner is that we control who works with us, which may or may not include relatives. The type of people we employ and with whom we spend many hours working together greatly affects our work enjoyment level. A good working relationship with a family member can bring a great amount of happiness to life. A bad working relationship can bring misery.

Family member hiring and firing decisions impact the relationships the family business leader (FBL) has with relatives inside and outside of the business. There is no right or wrong policy for hiring family members. The key is that there needs to be a written policy to avoid hard feelings.

The written hiring policy should explain to family members—before hiring— that you expect them to have the highest standards of conduct and the best work ethic in the company. They should know, and be later reminded, that they will set the tone for non-family member employees. They have to be good examples, not giving excuses. Their reward is the knowledge that when they compete with a non-member employee of equal skill and attitude, they will get the promotion. If it is the case, the policy should state that they will not get it if the non-member is a better candidate.

The policy should be strongly worded regarding confidentiality to which the family member employee must conform. They will inevitably have access to plans that cannot be revealed to staff. If a confidentiality breach takes place, it will be grounds for dismissal.

The hiring policy should express that the new family member will have a written job description before starting with the family business and will be required to rewrite that job description after three months on the job.

One benefit of a written policy on hiring of family members is that the individual family member employee, the rest of the family and the non-family employees of the business have confidence that the hired family member has earned his or her spurs.

Most successful family businesses follow a clear policy for family hiring and firing. The FBLs of the family businesses that make it to the next level clearly know what he or she wants to achieve when bringing family members into the business. Having a written policy that can be discussed before the mutual commitment is made by the FBL, to hire a new family member and before the family member agrees to be hired, will alleviate any gray areas.