Working With Family Members and Friends

Family businesses are the result of natural affinities that evolve among people who grow up together and have financial interests in common. These affinities are a source of strength and can provide a solid foundation for an emerging business. That said, what does it tell you when many of the articles about family businesses, or hiring friends as employees, focus on how to avoid favoritism, nepotism, conflicts of interest, and double standards?

Traditional Management Advice for Family Business Owners

Regardless of how scrupulously fair and transparent you are in managing friends and relations, petty resentments and perceptions of favoritism will exist and probably persist. All of the traditional advice to deal with these perceptions is helpful and relevant:
  1. Don’t hire friends or relations if they’re not really contributing.
  2. Formalize all agreements by putting them in writing.
  3. Hold everyone in the company to the same standards for compensation and accountability.
  4. Avoid obvious signs of favoritism, such as use of a company car or assignment of the best office space.
  5. Be transparent and communicate.
Those are the guidelines for protecting non-related employees and minimizing their grounds for complaint. You also have to take care of your relationships with family and friends:
  1. Be careful that “maintaining objectivity” doesn’t cross the line to become “harsh treatment.”
  2. Don’t allow employees to gang up on your friends and relatives because you’ve already stated, “They’ll have to prove their worth and make it on their own.”
Again, it’s definitely a good idea to follow these guidelines to the extent that it’s possible. Just don’t expect them to be easy to implement or to solve everything.

Don’t Forget the Emotional Side of Working With Friends and Family

Emotions are rife in the workplace, even in a business without family issues. Work is stressful and people are competitive. Employee handbooks, contracts, and counseling sessions are all designed to channel emotions into a rational, businesslike framework. It’s the best we can do but, the fact is, there are still contract disputes, rule violations, and the need for disciplinary action.
When you add friends and family to the mix, you’re introducing the residue from ancient childhood grievances, plus the possibility of ownership or succession battles, and disagreements over the future direction of the business.
How to manage all of this? You may feel that you’ll need the wisdom of a sage, the patience of a saint, and the eloquence of a Roman orator. In fact it all boils down to leadership. Get some training. Find out what leadership style or styles suit you best. And then be yourself.
Despite the negative connotations, working with family members and friends can be a rewarding experience. Close existing relationships can form the nucleus of strong, cohesive teams and make the whole business of doing business a lot more fun.

Game Plan

Understanding your strengths and weaknesses as a leader will guide you to an effective strategy for managing family members and friends in your emerging business. There’s so much material out there, it’s hard to know where to start. Here’s a good overview from The Wall Street Journal.
While the preceding article makes the case that leaders can learn to adopt different styles, others believe that it’s better to identify your natural style and stick with it.
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