Hiring Outside the Family

Tom HublerBy Tom Hubler, Executive Consultant

While some family businesses—particularly very small ones—are entirely family-run, most end up eventually hiring outside of the family for various roles. Over time, this creates a new situation family business owners need to prepare to deal with: how to hire a family member without being accused by non-family employees of favoritism or nepotism, and how to strike the right balance between being a great employer and taking care of your own family.

The Question of Hiring Family

Business owners and managers are in a truly unique position in our society as they get to decide who does and doesn’t get a job. That seems like an obvious statement, but it’s a huge power with implications that aren’t always fully recognized. This hiring power not only directly affects the people being hired, but it also guides the way the business grows and the way its culture develops.

In particular, the decision to hire family members can dramatically alter a business’s identity as well as expectations going forward. When hiring a stranger, it’s relatively simple: you have a job that needs doing, and this person is the best person you’ve found for the role and appears best suited for fitting into your company’s culture. While it’s certainly possible to hire family because they’re the right fit for the role (often because the family connection gives you unique insight into their skills and abilities), you’re also left with other questions:

  • Are you hiring this person because they’re the absolute best, or because they’re qualified enough but your desire to work alongside them pushes them up in the rankings?
  • Are you explicitly hoping to hire a family member as a way of supporting them financially, or providing them with a career trajectory?
  • Are you hiring someone to memorialize a culture you shaped rather than to help it grow to the next level?
  • Are you hiring someone in the hopes that they’ll take your place when you retire?
  • Are you hiring them because you want “family business” to be part of your company’s identity?

Even if the answer to every single question above is “no” and your family member is simply the most qualified individual for the position, you need to reflect on these questions, because even if you don’t ask them of yourself, your non-family staff will almost certainly be asking them amongst each other. Employees have a keen nose for nepotism, and even if you’re completely above-the-board, you’ll need extra transparency to make sure your staff knows you’re treating everyone fairly and equitably—especially in today’s tight labor market, when other businesses may be out to poach them.

This transparency is important during difficult times, including the recent pandemic and now, inflation and increasing economic uncertainty. Non-family employees that were more-or-less content with the family part of the family business pre-pandemic may be more willing to question the fairness of the arrangement if they had their pay or hours reduced or were temporarily laid off, while family members were unaffected or the first to return. It’s important for you to reflect inwards to see if they have a point—your love for your family during a uniquely challenging period may have led you to favor taking care of them over others without your realizing it.

This was, of course, entirely your decision. Many family business owners may have made the conscious decision that as the business returned to normal, priority was given to members of the business family. If this was your choice, just understand the extra work you may need to do to maintain the trust and loyalty of your non-family staff members.

All businesses continue to face never-before-encountered challenges right now, and this goes double for family businesses trying to ensure they do right by both the business family and any non-family members they may employ. For more advice on taking care of both your family and your business, pick up a copy of my book, The Soul of Family Business. Through personal anecdotes, real-world case studies, useful tools and frameworks, it offers an in-depth look at the challenges faced, strategies employed, and successes achieved by all sorts of family businesses. And as always, feel free to call me at 612-375-0640 or drop me a line at Tom.Hubler@thePlatinumGrp.com

Tom Hubler is a nationally renowned expert on family business issues and author of The Soul of Family Business: A practical guide to family business success and a loving family.