Oh Brother! The Pros and Cons of Hiring Family

If you think firing an employee is a difficult task, imagine how uncomfortable it would be firing a family member. Too often, business owners hire family based on emotion and fail to think about what’s best for the company and its other employees. It’s not to say employing family members is a bad decision, but it is a decision that requires ample consideration.

About 80% of the world’s businesses are family owned, while family-run businesses account for nearly 35% of the largest companies in the U.S., according to research from the Kennesaw State University Coles College of Business. Although employing family can induce certain downfalls, it can also provide great benefits that could be worth exploring. 

The Cons:

Let’s first address the risks that can be associated with hiring family members. Understanding and evaluating potential pitfalls will allow you to better determine whether or not a relative will be a good fit.

  • When hiring your own relatives, you run the risk of giving the impression of favoritism. This can create hostility between you, your relative and the rest of your employees.
  • On the flip side, family members may be expected to do more than other employees due to their history and relationship. They may be expected to work for less money or work odd hours, especially during the start-up months and holidays. Aside from violating labor laws, this can cause your relative to feel exploited and abused. 
  • Every family deals with their fair share of drama. Working with relatives can create tension if family drama fails to remain at home.

Although the last issue can only be avoided by handling adversity with a mature mental attitude, the remainder of the problems on this list can be resolved by handling family employment in a professional and concrete manner.

In the event you decide to hire a family member, it is imperative that you place the relative in a position that fits their skill set. A thorough job description clarifies the requirements for the position and helps prevent any confusion that may arise regarding your expectations. Knowing exactly what a job requires allows both you and your family member to determine whether or not they would be a good fit. Compensation should always commensurate the position.  

Another key factor to successfully hiring and working with family is the ability to think and act professionally, not emotionally. This is a two-way street and its importance must be expressed and understood prior to offering employment. The last thing you want is to have your customers and employees overhear you and your relative arguing, especially over non-work related matters.

The Pros:

Having explored the potential downfalls, let’s take a look at the positives of hiring family. In the event a relative is a good candidate for the position, you should take full advantage of these benefits.

  • Tax deductions are available for your business when you pay for health insurance for a spouse or child employed by you.
  • You don’t have to pay federal unemployment taxes on a child until they turn 21 (don’t forget to adhere to Labor and Industry regulations regarding hiring children!)
  • Relatives will hopefully have a higher level of respect for you and your business and want to see you succeed.
  • Interviewing is tedious. You never know whom you can trust and if your interviewee is capable of doing what they say they can do. You know your family and you are familiar with their strengths and weaknesses. You know exactly who you are hiring.

The key to successfully hiring family is simple: ensure the relative you hire fits the job description you are hiring for. Pay them solely based upon their performance and treat their employment with fairness and transparency. Every business differs but it’s important to heavily weigh the pros and cons prior to offering employment to a relative.

Bottom Line: Save the drama for your mama and get to work.