Before hiring loved ones, consider whether they’ll actually contribute to your business. If they don’t, it could end in failure.

By Jaime Fraze

The rewards for hiring family and friends can be numerous, but the pitfalls can be serious. (Photo: sirtravelalot/Shutterstock)

Your friends and family mean the world to you. They’re your confidants, your role models, your safe place. You trust them wholeheartedly, and you love them unconditionally.

But should you hire them? That depends on a number of factors. It might sound attractive to hire loved ones, but there are pitfalls to consider.

Note the risks

When you hire a friend or relative, you may find that he or she does not take the job as seriously as you’d hoped. “They may sometimes expect professional and personal freedoms that they would not expect in normal employee-boss relationships,” said Brad Egeland, a business solution designer and consultant and author of “A Real World Project Manager's Guide to the Successful Project.” 

They might expect extra freedom, such as more vacation time. They might think it’s OK to show up late. They might also give unsolicited input, challenge your authority and question your decisions. You might find yourself growing resentful of this employee, and the personal relationship could suffer.

“I'm not saying this always happens, of course, but it is more likely to happen,” Egeland said. “Be careful; it can be a downfall and can lead to sloppy follow-through within the organization. Watch out how your customers may perceive your ability to deliver.”

Often, family and friends will have trouble respecting you as a boss. “Think of it as your teenager who leaves the lights on or isn't as careful when he's walking down the hall with a large suitcase hitting the wall,” he explained. “Why? Because he doesn't own the house. He doesn't pay the bills and in most cases isn't made to participate in too much of the maintenance.”

The house, and the expenses therein, often don't mean the same to that teenager as to the homeowner parent. “No matter how hard you try to convince them otherwise, often friends and family still see you as a friend or family first, not management authority.”

If you can’t fire them, don’t hire them

For anyone starting out in small business, it can be hard to find top talent. So when a family member or friend offers to take the job, you’re delighted – until things start to go sour. Performance is poor, they’re always late, they don’t meet deadlines … and you’re thinking about letting them go.

“You know what the right decision is; but you’re caught,” said Brad Farris, principal at Anchor Advisors. “What will Thanksgiving dinner be like? What will my friends/family think? You used to like this person, but now you resent them so much. You’re losing an employee and a friend. So you hesitate.”

And the situation worsens. Your rule-abiding team members start to feel demoralized. They lose respect for you. 

“Hiring someone you are close to is a dangerous business,” Farris said. “The upside can be terrific, but so can the downside.

“Never hire anyone you can’t, or won’t, fire.”

Define responsibilities early

“I have never heard a piece of advice more widely given and more extensively ignored than ‘Never hire family or friends,’” said Eric Herrenkohl, president of Herrenkohl Consulting and author of “How to Hire A-Players.”

There are several reasons that small business owners ignore this advice. When you’re just starting out as a small business owner, you might not have a huge pool of prospective employees to choose from. Your loved ones, however, might already be invested in your success, and are willing to help. Perhaps you’ve counted on them in the past, or they’ve helped you through other personal challenges. Why not this one, too?

Just because they’ve delivered in a personal capacity does not mean they’ll deliver in a professional one, Herrenkohl said. That’s why it’s so important to be clear and upfront at the beginning of the hiring process, whether the potential employee is a stranger or your sister.

“Treat that working relationship the same way you would any other: Define roles and responsibilities before you make any hiring decisions,” Herrenkohl said. “Agree on the financial compensation, and absolutely put it in writing.”

And always state, up front, how you will exit this working relationship if things don’t work out. 

“Handled right, strong people with personal ties to you can be the foundation of a fantastic team,” he said.