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Employing family members in your business can be both an advantage and a disadvantage.  Advantages include that when a business struggles family members are typically more likely to remain committed to the business and go the extra mile to help the business to rebound.  Another perceived advantage is that children who work in the business can give a natural succession plan when the older generation decides to step away from the company.    

             Family members are typically more likely to remain committed to the business 

However, there may be disadvantages like instances where certain family members are being overworked, perhaps 12+ hours per day, while other family members are not working nearly as many hours and may consider their position in the business to be their right.  Other examples include when non-family employees feel disheartened in relation the business’s loyalty to family member employees.  Especially if they feel their career prospects will be limited relative to the family member employees, or if the family members are given improper seniority or compensation this may create tensions within the business dynamic.  

So, while there are numerous advantages to hiring family members these disadvantages and others must be addressed.  With all this in mind, this article will focus on the four recommended practices for hiring family members into the business.  

                          For each role, create explicit job descriptions and expectations.  

Creating clear expectations for each role and setting performance standards will assist you in raising the bar for all members of your firm.  It's easier to perform objective appraisals and objectively address any concerns with your family and non-family personnel when you know well what you require from each of them.  Consider defining career routes for each employee as part of the professionalization of your organization, where you map out different trajectories inside the firm and decide on performance objectives jointly.  This technique can help non-family employees reduce turnover by demonstrating how they can advance.  It will also assist you in identifying motivated employees who may be able to take on leadership roles in the future.  

                                                                        Establish consistent pay 

According to Atom small business experts 2022 report, establishing market-based compensation rates for each position in your company is one of the best methods to avoid favoritism and boost employee loyalty. We usually advise family membership businesses to keep ownership and employment interests separate.  This case permits family members to pay firm revenue based on ownership shares while retaining work-related compensation tied to employment.  

 Make it clear that working in the family business is a privilege rather than an entitlement.  

Employment in the company should be viewed as a chance, and family members' applications should be evaluated on their own merits.  Hiring a relative based entirely on a blood link can produce friction among coworkers and make non-family employees angry, lowering productivity and rising turnover.  Even if your highest priority is to pass your business to your children you would to well to consider other possibilities if their capabilities and performance demonstrate that the sustainability of the business will suffer.   

The most successful multigenerational family businesses encourage family members to get experience outside of the company before applying for a position.  Why?  It allows them to prove themselves outside of the family and allows them to bring in fresh business acumen and best practices based on their industry experience.    

                    Employees from both family and non-family members must be held to 

                                    the same performance and achievement standards.  

Your company exists to earn money.  It's not a charitable endeavor for the benefit of your family.  Setting explicit objectives and benchmarking performance might help you avoid bias in job evaluations.  If you're worried about favoritism or retaining impartiality, I propose bringing in independent experts to analyze your HR processes and put up a system for unbiased evaluations.  Every person you hire, including family members, must have a compelling business justification, according to the owner. You can avoid some of the employment hazards of hiring family members by developing professional HR policies and criteria for employment or advancement.  

                              Bonus Tip:  Keep Family Matters Out of the Workplace  

This is potentially one of the easiest ways family employment can go wrong.  The face of your business will suffer as personal issues become business issues and non-family employees feel excluded from the matters.  There should be agreements and routines in place to address family members outside of the work environment for the benefit of the business. 

Hiring family members without carefully considering how they fit into your company's current and future demands typically lead to familial strife, as well as, business troubles.  Following the recommended practices in this article can help your business prosper while employing family members and avoid many of the issues associated with family employment.