(This page may contain affiliate links and we may earn fees from qualifying purchases at no additional cost to you. See our Disclosure for more info.)
When you own or manage a small business, you need to wear many hats to run and grow your enterprise.
However, there will come a time when you need to hire employees.
When you reach that point, it may be tempting to enlist the help of family and friends. After all, they’re a known entity, they’re accessible, and they’re already rooting for you.
But even though it sounds like a great idea, there are potential pitfalls to consider.
Let’s look at the full picture so you can make an informed decision for your business.
Pros of Hiring Family and Friends
Aside from having previous knowledge about their character and background, hiring those you’re close to could offer the following benefits:
- Shorter hiring process. Since you know them so well, assessing their capabilities, attitudes, and personality traits can be much easier and faster as compared to external hires.
- More flexible and trustworthy workforce. Your loved ones may be willing to accept lower pay or an odd schedule to help you be successful. They’re also less likely to steal from you or engage in other behaviors that put your business at risk.
- Potential tax breaks. Depending on which family member you employ, you may be eligible to save money on your business taxes.
- Ability to assist those you care about. Providing work to a family member or friend in need of a job is sure to feel pretty amazing.
Cons of Hiring Family and Friends
Even though a lot of good can come from employing your inner circle, there's plenty of room for drama to develop that could damage your business and your relationships due to:
- Difficulty separating the personal from the professional. When you’re mom and the CEO, those lines can get blurred very quickly. When that happens, it will be tough to lay down the law at work and enjoy family time at home.
- Hiring for convenience over best fit. While making a quick hire saves you time in the short run, if your best friend or cousin isn’t as skilled as you thought, you have a significant issue. Your business will suffer due to their inability, and your relationship will be strained if you call them out on it.
- A complacent, entitled, challenging to manage workforce. Whether they intend to or not, your loved ones may take advantage of having an in with the boss. This could cause them to bend the rules or slack off because they feel like they’re doing you a favor and won’t be held accountable.
- Nepotism — perceived or real. Nepotism is a leader showing favoritism to family or friends in the workplace. Even if you keep everything 100% fair, your non-family employees could feel like outsiders and believe they are at a disadvantage. This can lead to resentment, low morale, and turnover of good talent.
Tips for Hiring Family and Friends
If after carefully weighing the pros and cons, you feel like you can handle the delicate dynamic of the family member – employer relationship, here are a few pointers to increase your chances of success:
- Assess their skills thoroughly and honestly. Ask for resumes and work samples and conduct interviews. While your screening process may be more informal when you’re considering your brother over someone off the street, don’t just skip right over it. The arrangement must be a good fit — for both parties.
- Set expectations right away. Just like any other employee, your best friend should have established employment terms such as pay, benefits, work schedule, job description, policies to follow, etc. Ideally, all of this information should be documented in a contract or offer letter.
- Establish the boundary between work time and personal time. If your organization is large enough, consider having another leader manage your loved ones directly. This separation will help operations remain more objective and be perceived as more fair. If this hierarchy isn’t possible, tell your family straight out: at work, you’re the boss and absolutely must be regarded as such.
- Treat them the same as external hires. If you’re going to write up Susie for being late for the third time, you have to discipline your cousin for the infraction, too. And, if they’re not cutting the mustard, you need to have the strength to let them go. Managing your family members and friends based on their performance rather than their relationship with you will go a long way in diffusing the perception of nepotism.
- Promote them with caution. It may seem natural to make someone with seniority a leader as your team expands. However, a stellar individual contributor doesn’t necessarily equate to an effective manager. So, before handing Uncle Jim the new title and accompanying raise, be sure he has the right skill set to handle the responsibility. Better yet, start developing him long before the need arises so you can both feel good about the move.
As you can see, the decision to hire family and friends falls into a gray area.
On the one hand, it can work really well, with you and those you care about sharing in your business’ prosperity. However, it can also go south very quickly, with you and those you care about no longer on speaking terms.
The bottom line? If you’re going to hire a loved one, make sure you both go into it with clearly defined expectations.
You can always find another worker and them another job. But you can’t replace the special bond between you that exists outside of the business.
Article written by Laura