Hiring Policies for Family Owned Businesses

Hiring Policies for Family Owned Businesses

The Jim Moran Institute for Global Entrepreneurship

Should hiring be strictly a business issue? There are two different approaches to this question. A family business could require family members that are interested in joining the firm to apply and compete for positions in the same manner as any other applicant. Promotions would be based on qualification not family membership. After all it is important to get the best employee for the position and to avoid any morale problems that may arise if an unqualified or underqualified family member is given a position in the company. On the other hand, in some family businesses there is a place for every member in the business that wants a position. Oftentimes in these businesses a position is created if one does not exist for an incoming family member. After all, it is a family business and it is the strength of the family ties and the commitment of family members to the business that is the greatest asset of the business.

In reality neither approach alone works best for a family business. A hiring process that incorporates the concerns of both the family and the business is the preferred approach. How would that work? Ideally thorough entry rules should be written up before members of the second generation begin to come of age to start working in the business. If these rules are clearly defined and have been articulated to all family members many misunderstandings could be avoided and lessen the possibility of offending anyone. I have found in my experience in working with family businesses that a majority of families have not established clear rules of entry for their children. Without rules, decisions about each family member have to be made on a case by case basis. The problem with this method is that it is difficult to be objective. More…