How to Hire Family Members and Friends Without Drama

Guest post by Jennifer K. Halford, Esq.

Many small business owners hire family members or friends to work for their businesses. And often times that is a good decision.

After all, it is convenient. You don't have to advertise for the position. You usually know the individual's work ethic. And they tend to be committed to their job because you are the boss.

Yet, hiring family and friends is also one of the areas I hear business owners having the most difficulty with. Friendships are destroyed when your friend fails to perform to standards. Family members may try to take advantage of you. Other employees may accuse you of nepotism.

Get the benefits of working with family members and friends without these problems. Make sure to do the following to hire your family and friends the right way:

1. Honestly assess roles: Ask yourself if you can really be their employer before you hire a family member or friend. Can you keep your personal relationship out of the workplace?

Even if you can do so, can they? Can your family member or friend accept you in an authoritative role as the employer? Have an honest conversation about your new roles before you offer the job.

2. Put the relationship in writing: The formality of a written employment agreement helps to separate the relationship from the job. Plus, you can place your expectations in writing to help avoid confusion or getting taken advantage of.

3. Own it: Anticipate that your other employees may be jealous or think you are giving preferential treatment. Get ahead of this potential awkwardness and have an honest conversation with your other employees. Let them know that your family member or friend will be held to the same standards and policies that they are. And then be sure to do so.

4. Be consistent: Provide the same training and accountability to all of your employees. Offer the same opportunities for advancement and increase in pay.

5. Don't make an example: Don't over-punish mistakes made by your family member or friend to "convince" other employees that you are impartial. The key is to be consistent in both enforcing standards and in rewarding good behavior.

Jennifer K. Halford is an attorney whose practice focuses on business law and estate planning. She is also a professor at California State University, Chico, where she teaches Entrepreneurial Law.