Navigating the Challenges of Hiring Family in Your Business: Strategies for Blending Personal and Professional

Ever wondered what it's like to bring family into the fold of your growing business? It's a dance of delicate balance that we unpack in today's discussion, where I pull back the curtain on the complexities of turning your entrepreneurial venture into a family affair. As we transition from solo freelancers to employers, the question of whether to hire relatives is more than just a matter of convenience—it's about aligning with shared visions and values, establishing trust, and the intricacies of relational dynamics in a professional setting. Tune in as we dissect the statistics, weigh the pros and cons, and offer you a roadmap for making these critical, often personal decisions.

Navigating the entrepreneurial journey requires us to make tough calls, and this episode doesn't shy away from the hard questions that accompany the expansion of your team. Whether you're contemplating your first family hire or managing a network of kin in your company, we expose the realities of nepotism, the benefits of innate trust, and the potential for creating a robust, unified team.

With real-world insights and stories from the front lines of small business ownership, this episode is a must-listen for any entrepreneur poised to make the leap from a one-person show to a family-run enterprise. Join us as we explore the hurdles and triumphs that come with blending the personal with the professional in the quest for business growth and success.

As a business coach, there are 6 critical mistakes that I see founders and business owners make.

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• Working endless hours without scaling new heights...
• Working harder to make even less...
• Lying awake, agonizing about your superior competitors...
• Spending more time doused in frustration than sipping the champagne of success...
• Always on the hunt for fresh strategies and new customers...
• Drowning in staff issues when you’d rather focus on business growth…

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Transcript

Speaker 1: 0:07

Welcome to the Entrepreneur to Employer Podcast. I am your host, brian Montez, founder of Scalosity Works, and the Entrepreneur to Employer Coaching and Membership Community. So congratulations as an order. If you've built a successful freelance business that has grown to the point where you need to hire, you have achieved a huge milestone. If you've already passed the point of making your first hire and your team is now growing well, congratulations is an order to you as well. So, regardless of where you are with scaling your team and your business, whether you're at employee number one or employee number 100, this podcast focuses on everything related to people operations. We'll cover best practices, strategies and solutions to help you build a sustainable and scalable business that is fueled by great people and a great culture. So if you're enjoying listening to this Entrepreneur to Employer Podcast, please subscribe, give us a like and give us a review. Your feedback will help us grow this podcast and we'll be able to positively impact more employers to help them build better work environments. Welcome back to another episode of the Entrepreneur to Employer Podcast. I am your host, brian Montez, founder of Scalosity Works. Welcome to 2024. This is the first official episode of 2024.

Speaker 1: 1:19

Today, we're going to talk about the pros and cons of hiring family members in a small business. I work with a lot of small businesses and I do see a lot of family members getting hired into the business. I've seen it work and I've seen it not work. So I thought it'd be good to talk about the pros and cons of, because chances are, if you're running a small business, you may already have some family members that are working for you, or you may be considering hiring some family members. Now, conventional wisdom discourages small business owners from hiring family members and there are some very smart and strategic reasons to do this, but there are still some drawbacks to consider. If you are going to consider hiring some family members, here's some guides and roadmap for you. First, I want to give you a little statistic. There are over 5.5 million family-owned businesses in America and, like most small businesses, family-owned companies struggle to find skilled employees, which may be the reason you're looking at hiring family members. So, to meet this challenge to all business owners, really you're going to have to ignore conventional wisdom and you're going to have to make the decisions that are best for your business and that may mean that you're hiring family members. This may be perceived as nepotism, but hiring family members can have a few strategic advantages. And again, if you hire family members, make sure they're qualified. You can overcome that nepotism by making sure they're qualified.

Speaker 1: 2:33

Here are the pros to hiring family members. Number one you should already have shared vision and values. Family members who often share similar values, work ethics and long-term goals will work better in the same business. I know Pricewaterhouse Cooper in 2023, they did a US family business survey that said 90% of the respondents of all generations say growth is important because it enables them to invest in their company's future, and they're only going to get that growth they have good, skilled employees and sometimes that means hiring family members. Your kids are most likely going to share your values and goals, but you can look beyond just your kids. Let's say you have a high-performing employee that fits your company's culture and you have a sibling or a spouse with the same traits. Hiring them. Of course, you still need to vet them, as you would. Any new hire can save you time and money when it comes to searching for a new employee and the concern that your new hire won't fit your company culture. Now, of course, there are some downsides. If you hire somebody that is spouse, married, there's risk to everything. So you do have to weigh the pros and the cons, but when employees, related or not, share the same values, it's often easier to work towards achieving common goals, since you're all invested in each other's success.

Speaker 1: 3:46

The second pro to hiring a family member is going to be the trust factor. For small businesses to succeed, your team must trust one another. Trust is paramount. Family members have a preexisting foundation of trust and that attitude can spread to other employees and create a strong team bond. Trust among your staff enhances communication, enhances collaboration, it enhances goal setting and it will improve decision-making. And the same price. Waterhouse cooper trust business survey said 91% of business executives say maintaining trust improves the bottom line. So trust is critical within the organization as well as with your clients.

Speaker 1: 4:24

The third pro is going to be loyalty. Employees want to work for companies where they know their opinions are respected. When you hire a relative of a current employee, they feel valued, that you trusted their recommendation, which is going to deepen their loyalty and their ties to the company. Family members usually like enjoying working together with further cement loyalty to your business. The fourth pro is efficient communication. Family members typically communicate more easily and effectively due to their familiarity and shared experience with each other. Streamline communication absolutely will minimize miscommunication and misunderstandings.

Speaker 1: 4:59

The next pro is going to be the fact that hiring a family member can lower your recruitment cost. Recruitment, as we know, can be very costly and extremely time consuming, especially today when many businesses compete for the same employees. Small business owners can reduce recruitment expenses, such as paying for job listings, recruiters or employment agencies, by hiring their kids and folding them into the business, or hiring your relatives. And since your children and relatives of current employees are already familiar with your business, the onboarding process should be shorter. It should reduce your training times and should help your overall costs. Alright, so those are a few of the pros to hiring family members.

Speaker 1: 5:32

Now let me give you some of the cons, because hiring family members can absolutely have potential drawbacks. One is the appearance of nepotism. Whether you're hiring family members of employees or your family, other employees may resent these new hires, especially if they're not qualified for the job. You've got to make sure they're qualified for the job. They're not, and it is just pure nepotism. Transparency is going to be essential in this. Know your staff about familiar relationship and why you firmly believe the new employee will make a great team member, despite the fact they're a family member.

Speaker 1: 6:03

Number two the appearance of preferential treatment. It's critical that this new hire does not get preferential treatment. Family members should avoid telling inside jokes, telling secrets or exuding any other behavior that would cause resentment. Things like job responsibilities, wages and paid time off for similar positions should be the same, and a hint of special treatment will increase resentment in the rest of the staff. So if that new family member employee is underperforming, they need to be dealt with the same way that you handle a non-family member employee. You give the family member special treatment for underperformance, you will create resentment in your company and then everything such as loyalty and trust will go out the window really fast.

Speaker 1: 6:45

Third emotional baggage. Let's face it all of our families, we're all dysfunctional. It's just to what degree we're human right. So the emotional baggage could very well be an issue. Family members may bring emotional baggage and existing conflicts into the workplace, which is going to create tension and make it difficult for everyone to work together. Now those tensions can absolutely permeate throughout your company and create negative, negative morale, and it's going to impact your growth. Regular communication is key to resolving these family conflicts, so make sure that communication stays strong among family members and that they don't bring their emotional baggage into the workplace, because if they do, it's just going to make the non-family employees very frustrated and question your decisions.

Speaker 1: 7:30

Before family members join your company, you or your HR manager should set boundaries between the related employees, including you and your family. Explain what behaviors are not acceptable in the office. Then you might want to consider adding a section of this to your employee handbook if you are going to have family members. So here's a few tips for hiring family members. When hiring relatives, you need to number one, be clear about your expectations. Set clear expectations for the new hire so they understand their roles and responsibilities. You should be doing that whether they're a family member or not, but it's even, it's very important to do that if they're a family member. You may think because you're hiring a family member, you can cut corners. Absolutely not. You still need to be very clear about your expectations.

Speaker 1: 8:08

But when hiring family, make sure you temper expectations. Don't expect them to be perfect, exactly as you do. Be patient with them as well. Give them time to adjust to their new role. So, if it's applicable, explain your expectations to the employee who suggested you hire their relative, things don't work out. You don't want to lose your other employee as well, which is what we often see. If you have to fire one family member, the other family members get pissed off and want to retaliate. Make sure you have understanding and expectations established before they start.

Speaker 1: 8:36

Second, make sure you're fair and impartial which you should be anyway with all of your employees, but all employees need to be treated equally and on the same playing field. Some should never be accepted in your organization. Third, plain and simple hire the best person for the job. Don't feel obligated to hire relatives just because somebody says hey, my brother needs a job, he's great. So, whether it's your own family members or an employee's family members, don't feel obligated to hire them simply because they're family. Make sure they are qualified for the job. You are going to have to defend this hire. You're going to have to explain to the team why you hired them and why they're qualified, and if you can't articulate that, you're going to have a problem. After making a final decision, weigh the benefits of hiring family members against the potential drawbacks. It's critical that you do that, and when you do that, then you'll be able to make a much clearer decision about whether or not hiring that family member makes good sense or not.

Speaker 1: 9:30

All right, I hope you've enjoyed this episode of Entrepreneur to Employer Podcast, where we talked about pros and cons of hiring family members in your small business. I've got a couple of favors to ask. Number one if you enjoyed this podcast, feel free to subscribe to it. We do publish one episode per week and I would love to have a review. Let us know what you think, and I do read every review and use it to make each podcast better and better. And, last but not least, if you have somebody that you feel would benefit from this podcast, grab the link to the show, text it over and say hey, I just listened to this podcast on the pros and cons of hiring family members. I think you'd benefit from it. The more you share this podcast, the more it's going to help us reach a wider audience and impact more business owners and help them create the best businesses with the best employees. So that wraps up this episode. I hope you have a great week and we will talk to you next week.