It’s frequent in companies of all sizes—but especially for privately held companies—for owners or managers to hire friends and family. In previous posts, we discussed some reasons for this and also talked about some of the dangers of nepotism in the workplace.
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Despite the risks, though, many business owners and managers still choose to hire friends and family. If you do go that route, here are some tips for managing these relationships in order to mitigate the risks to the company and the personal relationships involved, as provided by Doug and Polly White in an article for Entrepreneur.
Don’t Promote Automatically
Particularly when hiring friends and family in start-ups, there is a tendency to promote the first employees to management positions as the company grows and hires more staff. Just because your friend or nephew was there from the beginning doesn’t mean he or she will be an effective manager.
Whether friend, family member, or general employee, promote based on competencies and potential, not tenure.
Assess the Employee’s Skills Early
Don’t put people into positions of increasing responsibility first and evaluate their abilities later. It’s easy to promote but difficult to demote. This is especially true when personal relationships are involved.
Even small companies can, and should, establish criteria for positions that identify the knowledge, skills, and abilities required to perform effectively in each role.
Invest if That’s Appropriate
If you do hire friends or family, you may find that they don’t currently possess the skills to succeed in the areas you want to place them. If they have legitimate potential, consider investing some time, money, and/or resources to help get them there.
And, of course, do the same with nonconnected employees; all staff should have the ability and support to improve and develop competencies.
Keep Salaries in Line
Salaries are generally confidential in most organizations. But from time to time, that information gets out. Few things are as demoralizing to an unrelated employee than learning that a coworker who is a relative of the owner is earning more than he or she is for doing the same job.
Beyond personal feelings, of course, companies that make salary decisions that serve to negatively impact certain workforce segments can be at risk of liability.
Set Performance Expectations Well in Advance
As noted in our previous post, there may come a time when the professional relationship of a friend or relative just isn’t working and discipline, or termination, actions need to occur.
To avoid the pain and angst associated with such decisions—with any employees—make sure to set expectations up front. Communicate these expectations clearly, and evaluate performance based on them. Adjust over time as the employee develops new competencies or business shifts require.
Hiring friends and family is a centuries-old practice. While there are many reasons this was the norm long ago, there are risks of doing so in the modern workplace—risks you should be aware of and take steps to avoid.