The relationships and values involved with family businesses can be strengths, but structure also is required so family dynamics do not become the most influential factor when making business decisions, according to Harvard Business Review.
These dynamics often can be seen when it comes to hiring family members, who sometimes are hired through obligation and without a formal interview or job description. Titles can be given based on family hierarchy rather than skills, and some family members can be paid significantly more than non-family members who have the same role.
Creating policies ensures that rules—and not relationships—drive decisions. Harvard Business Review recommends establishing the following employment practices for family members.
- Create a formal hiring process for all roles—family and non-family.
- Write down clear expectations regarding which family members are eligible for employment and the qualifications needed to be considered for roles.
- Ensure everyone hired has a clear job description and performance metrics tied to accountability.
- Set in place a code of conduct and grievance procedures applicable to everyone.
- Agree on a fair, standard way to set compensation for family and non-family members.
It is important to have clearly defined hiring and employment criteria so the wrong person does not end up in a position simply because of his or her role in the family. Transparent processes help to ensure performance expectations are not overshadowed by a family connection.
