Managing a Business with Family Members: What to Remember


best toolsRunning a family business isn’t too different from running any small business. Yet, several problems could only arise in family-owned businesses. The issues may include daily arguments, different opinions about operations, dividing profits, and many more.

However, we cannot deny the fact that family-owned businesses are vital in the development of a community. They may be small, but they play a crucial role in boosting the economy. Did you know that there are 5.5 million family-owned businesses in the United States alone? And these companies employ at least 64% of the workforce and contribute more or less 70% of the GDP.

In other terms, family businesses in the US are responsible for the employment of 98 million people and creating new jobs.

Hiring a Family Member

Before hiring a family member, there are a few things to think about, including the business owner’s goal in hiring the person.Are you hiring a relative to provide them income? Or maybe your goal is to give the person an opportunity to help the business grow? Your answer to these questions paves the way for the success or failure of your relationship with the employed family members.

Conflict and issues can often arise when family members meddle in business operations. And with poor management practices or governance, the entire organization’s health can suffer long-term, including family relationships.

Keeping business separate from personal issues can be particularly challenging, especially if business owners feel obligated to hire family members, even though they are not qualified for the position.

But let’s not forget that there are some successful family businesses too. And according to them, the following tips help manage a family business.

Hire for the Position

It’s pretty standard for business owners to feel obligated to hire people from the family. In most cases, they employ family members to help them have a job and support their own families, not knowing the adverse effects of such action.

Let’s get one thing straight, hiring a family member even though they do not have the skills required by the job is a big mistake. Doing so is forcing a person into a responsibility they don’t like or qualify for, and as a result, they don’t perform excellently, which impacts the business.

Be Clear with Their Roles and Your Expectations

Before hiring a family member, it’s essential to be clear with your expectations. As an employer, you are responsible for communicating job expectations as an initial step of their employment- this is a good practice to guarantee a successful work experience.

Family or not, employees need to clearly understand their roles and what you expect from them. In addition, stating the consequences of not meeting your expectations is also critical. This process should be done during the hiring process to ensure that they perform accordingly.

Elaborate Their Job Description

All employees must understand the role they are playing in the business. And to ensure that they don’t intertwine with operations they don’t belong to, it’s vital to provide well-detailed job descriptions that comprise their tasks, goals, quota, and responsibilities.

It would be advisable to elaborate on each task they need to do. For example, if the employee’s job is to protect the company from fraudsters, include the specific tasks you expect them to do, such as finding financial fraud detection and detection tools, keeping sensitive information secure, or creating backup files of financial reports.

And lastly, review the job description with the employee to know if they understand their role very well.

Develop a Process for Managing Employee Performance

A successful business knows that managing employee performance and incorporating these strategies into all business operations is vital to the company’s overall performance. Here, you need to use verifiable data to evaluate your employee’s performance.

The objective of assessing their performance is not to pinpoint their weaknesses but rather to help identify areas they need to improve. You can support this process by setting employee goals and helping them create methods that would work for them. Remember to be fair with your employees. If a family member can’t meet expectations, you should deal with them in the same manner as your other employees.

Don’t Be Afraid to Make Hard Decisions

As tough as it can be, laying off family members because they don’t meet employee expectations must be done. After all, it’s for the benefit of the entire company. If you have done everything in your power to help them understand their roles and perform their tasks diligently, but they still do things poorly, it’s time to make the tough call and end their employment.

In conclusion, family-owned businesses operate similarly to other businesses. The only difference is that they often work with family members. And working with family members is one of the common challenges they face as they do not want to hurt the people they care for. However, business is business, and the owner must always prioritize what’s best for the company.

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