The Politics of Trying to Work With Relatives

The Politics of Trying to Work With Relatives

Delaware Business Review
by Howard H. Simon, CPA and Jill R. Lock
Simon Master & Sidlow, P.A.

Relatives working in a family business can help the company flourish if certain considerations are given.By adhering to certain rules and guidelines both the relative and the business have a better opportunity to prosper.

When hiring a relative, certain rules must be set and enforced at the onset.The rules should be stated clearly, communicated honestly and applied fairly to all relatives.

The formation of the guidelines depends upon the family’s philosophy, mission, size, industry and resources available.Those guidelines must be consistent with the family’s values.

Rules for relatives entering a family business should include:

  1. When and under what circumstances can relatives enter the business?
  2. What experience and/or education is required?
  3. Do they need to fill a vacant position or can one be created for them?
  4. Do they need to be a certain age to be employed at the business?
  5. Do they need to retire at a certain age?
  6. Is re-entry possible after a voluntary or involuntary exit?(Due to child rearing, attendance at graduate school, argument with family members, etc.)
  7. Is part time work permitted?

If the family business owners in the business decide to change any of the rules, they must inform everyone as to the new rules.Everyone effected must understand how these rules will impact each individual’s circumstances.

Once the relative is hired, training must begin.Their training should be determined by the type of position filled.It is important that the trainer not be another relative, if possible.

This designated coach can provide the industry-specific guidance to the individuals as well as candid feedback to the other family members in the business as to the individual’s progress.

All too often, a relative will train the new family employee.This relative may become too tough so as to not show favoritism or become too soft because of the relationship.These relationships are encumbered with emotional aspects and ties.

When hiring a relative, it is important for the responsible executives to implement the guidelines and be consistent with their application to all family members.In addition, business owners should make certain that the relative is not trained by another family member.In this way, the relative is more likely to be given a “fair” assessment of his or her abilities.