Things to Consider before the Hire

By Linda Palmer, MBA

During these tough economic times, small business owners are being approached more often by family members and friends seeking employment or partnership with increasing frequency. Through my own personal experience as a small business owner employing family members, and as a result of researching other companies and associations, the following counsel is worth considering before the compassionate welcome mat is rolled out.
1.IMMEDIATE CONFLICT – No matter how it is handled, other employees are going to feel conflicted about the family member coming into the business. They wonder at the new pecking order such a hiring brings, who’s going to be given an advantage as far as work responsibilities are concerned, will there be favoritism, is financial compensation fair? Even under the best of conditions, employees will be looking at, and evaluating, the fairness principle when family and friends are hired. This can be difficult on employees, the new family member hire, and ‘the boss’. It’s smart to set up parameters in advance of hiring family or friends to help mitigate potential problems, but recognize that ‘conflict’ will exist in the company in spite of the most well thought out plans.
2.DEVELOP POLICIES FIRST – If you don’t currently have established policies encompassing just about anything that can affect personnel, it is important to do it now. A policy manual regarding days off, vacations, chain of command, lunch and break times, hours of operation, delegation of responsibilities, expectations, merit and pay increases, seniority, insurance, profit sharing, and benefit packages is essential to extend security to employees, and family member hire alike. Reducing opportunities for conflict is essential in keeping a company from becoming a hotbed of gossip, complaint, speculation and intrigue.
3.JOB DESCRIPTIONS – If you have no need for a new employee, don’t hire a family member or friend out of compassion or a belief that you can work them into something as you go along. It is good business practice to develop and keep job descriptions for every position in your company, but it becomes even more important when family members are hired. A job description also helps the employer and the employee navigate touchy areas in family expectations. It’s hard to turn down a family member who wants to take their kids to a theme park instead of attending a business conference; after all, those kids may be your nieces, nephews, or grandchildren. Saying ‘no’ to such requests without a job description which requires all employees in this position to attend such conferences can cause problems at home. At the same time, it also prevents you, the ‘boss’, from imposing your personal errands on a family member working for you because they are so easily available.
4.SUPERVISION – If possible, assign your family member or friend to report to a management employee. Decide now whether or not you are willing to keep a ‘hands off’ policy when your family member is corrected by your manager. If you can’t help interfering in any dispute that might arise between them, you will become a discouragement to your management staff, and other employees will note the preferential treatment. If the family employee is a younger sibling, it will be hard to resist the role of older brother and sister ‘protector’. The chain of command must be clearly communicated to the family member upon hire, and faithfully exercised on the job.
5.COMPENSATION – It doesn’t matter what your family member or friend was paid on their last job, nor does it matter how much compensation they believe they ‘need’ to support their family. It is important that compensation for the job you are hiring them for is in line with the job description and practices in the larger business community. Compensation should be in line with their duties and responsibilities. Special bonus situations, sweetheart deals, or travel bonus perks, increases in benefits above and beyond the job descriptions reasonable parameters will only net the family employee and yourself a lot of resentment by other employees, and potentially even litigation brought on by other employees.
6.TERMINATION- A ‘friend’ or ‘family member’ relationship is often quite different than and employer/employee relationship. Thinking about this reality ahead of time can save a lot of problems later. It may be difficult for an older sister to accept the role as an employee of a younger sister, and often it is impossible to refrain from challenging the younger sister’s decisions. A best ‘friend’ may not be as reliable as they seemed as a soccer coach. It is wisdom to agree to a three month ‘no fault’ trial period to see if things are going to work out as everyone concerned believes it will be at the outset. During this period, there doesn’t have to be a reason, other than it isn’t working out well, for the termination. What is important is that an agreement is made, up front, to such a trial as it will help prevent ‘family’ problems and misunderstandings if thing don’t go well.

In any event, what is most important to your company is serving your business and customers in the most optimal way possible. If a friend or family member’s background and experience appear to be an enhancement to that priority, then it might be worth the inherent problems such a hiring brings. It is never a good idea to hire someone, anyone, based on their financial need or anything else outside of good business practices.
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