I frequently get asked for advice on hiring, especially as it relates to working with or hiring family members. This is especially true with small business owners, who often look at family members as employees they feel they can trust—and even possibly hire for lower salaries than other employees might demand.
In general, I advise people to avoid hiring family unless they possess some unique talent or an ability to do something that no one else does. However, there are rare instances in which hiring a family member can work if you structure the relationship the right way. Here are some steps to ensure that having a family member as an employee works:
Require the family member to report to somebody apart from you. By doing this you’ll eliminate the look or feel of nepotism or favoritism.
Be open and honest in communicating expectations and providing feedback. Do not hold back or expect less from a family member. In one business I’m familiar with, the owner hired his son for an entry-level position and made sure he performed all the most unpleasant tasks associated with the job. He encouraged other employees to assign projects to keep his son busy and accountable.
Differentiate and establish clear boundaries between work and personal life. Keep work-related issues at work. Agree from the start not to discuss work-related issues at family functions. Equally important: Do not let spouses of the family members discuss work-related issues at family functions.
Establish protocol for work settings. For example, in a father-son working relationship, don’t allow your son to refer to you as "dad" at work. If other employees call you by your first name, require the family member do the same.
Be honest with other employees about your relationship. Sometimes the relationship may not be clear, as a sister or an in-law may have a different last name. Be open about familial relationships. Nothing can be more uncomfortable than one employee bad-mouthing another employee, only to find out later that the employee they were bashing is the boss’s relative.
I generally discourage small business owners from hiring family members. If you do it, the above tips should make the experience a lot more positive for all involved.
Founder, President, and Chief Executive Officer
Salt Lake City
Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.
To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.