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How To Hire Your Brother

Monday, August 31, 2009

Use Caution When Giving Relatives And Friends A Job
By Don Sadler

In these tough economic times, it’s not uncommon for micro-business owners to be approached by family members or friends looking for a job. Laid off from work and unsuccessful in landing a new job, these relatives and friends may feel like you’re their last hope for employment.

It’s natural to want to help those who are closest to us and may be struggling to find work in a shrinking job market.

However, caution is in order when it comes to hiring family members and friends. There are few other business decisions that have the potential to create as much conflict and inflict as much damage—both to the people involved and your micro-business.

“Hiring family and friends creates immediate conflict with other employees, no matter how it’s handled,” says Chris Wilcox. He’s a partner in the Las Vegas-based accounting firm of Johnson, Jacobson & Wilcox and specializes in working with family-owned businesses.

“Employees will wonder how family and friends will be treated: Do they come in at the bottom of the totem pole or start at the top? The bottom line is that you need to have some kind of policy in place that governs hiring family and friends.”

Steven S. Little, a business growth consultant and the author of three books, including the recently published “Duck and (Re)Cover” (Wiley, 2009), concurs.

“Every owner thinks they’re different—that the need for rules doesn’t apply to them—but they’re not. It’s always difficult to do this, so you shouldn’t hire family and friends until you have rules and guidelines in place. It doesn’t matter what they are, so long as they’re communicated to everyone and everybody plays by them.”

Often, owners go into these kinds of hires with rose-colored glasses, thinking that problems other owners have experienced when hiring family and friends will never happen to them.

“But the problems in these situations are very common,” says Little, “which is why it’s smart to set up parameters beforehand in anticipation.”

Develop Policies First
Formal policies for hiring family and friends should cover such areas as:

Experience, Skills and Education Required for Position
These should be spelled out in detail for any position being considered, and should be no different for a relative or friend than they would be for any other potential employee.

“Write a job description for the position, not for the person,” says Little. “Be objective—you have a specific need and the ideal candidate’s qualifications would look like what? Pretend that you’re writing a classified ad for the position, and overlay your friend or family member and his or her experience and skills with it.”

Lines of Reporting and Supervision
If possible, it’s often wise for relatives and friends to report to a manager who isn’t a family member or to someone other than the business owner. This may allow for more objective feedback, mentoring and encouragement. It also helps demonstrate to other employees that the family member
or friend isn’t getting preferential treatment.

However, this arrangement may cause the manager to feel threatened by having to supervise a relative or friend of the boss.

“It definitely adds a layer of complexity that has to be dealt with,” says Wilcox.

As the boss, you should make sure the manager is comfortable supervising your family member or friend. You should also make sure the manager understands your expectations for supervising your friend or relative.

Compensation
It’s generally recommended that owners avoid paying friends and family members any kind of insider’s bonus or elevated salary.

Rather, their compensation should be based strictly on the fair market value of their job responsibilities and the amount you would pay (or are paying) any other employee for the same or similar job functions. This will help avoid resentment, or even possible litigation, on the part of other employees.

Job Duties and Expectations
Your policies should include a formal written job description that details specific tasks, responsibilities and your expectations of the employee’s performance.

This includes describing where the job fits in your company’s employment hierarchy—whether it’s entry level or management, for example. The description should also address specific criteria the employee must meet to be considered for advancement, promotions and raises.

Potential Separation
It’s critical to plan upfront for the possibility that your relative’s or friend’s employment with you may not work out, says Wilcox, and spell out in detail the potential separation protocol, including possible severance.

“Are you prepared if you have to call your friend or family member in and tell them you have to let them go?” he asks.

For this reason, Little recommends filling the job position on a temporary trial basis of perhaps three to six months, after which time either you or the friend or relative can discontinue the arrangement if either of you aren’t satisfied.

“At the end of the trial, you should sit down together and both be able to end the relationship if you don’t think it’s working out, without having to give a reason and with no hard feelings,” explains Little.

“I’ve seen it go both ways,” he continues. “I hired one friend who brought skills that complemented mine into the business, and it worked out well, because we didn’t step on each other. But in another case, a friend I hired and I clashed because he basically wanted to do my job and didn’t accept that I was the ultimate decision maker. This can be a tough lesson learned, but you’ve got to move on.”

Hiring friends can be especially difficult, Little adds, because you often see characteristics in them as an employee you didn’t notice as a friend.

“Sometimes friends turn out to be lousy employees. You have to ask yourself what’s more important: your friendship or the business opportunity?”

Get An Outside Perspective
Little recommends forming an outside board of business advisors that you, the family member or friend, or any other employee, can approach if necessary.

As hard as you may try to avoid giving, or even appearing to give, family and friends preferential treatment, “employees are keenly aware of the potential for nepotism, whether it actually exists or not,” Little says.

“Having a board of advisors who are truly objective gives everyone an outlet where they can discuss potential problems if they arise.”

Answer The Tough Question
Ultimately, the decision to hire a family member or friend should be based on just one criteria: Does your business have a unique need that the individual can fill?

“Will the hire help you serve your customers better or not?” asks Little. “Nothing else should factor into the decision—not the economy, the individual’s financial or employment situation or anything else.

“Your business and your customers must be your first priority.”

Don Sadler is a business freelance writer based in Atlanta, Ga. He has yet to hire his first employee. Reach him at don@donsadlerwriter.com.


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