Hiring family members in a small business can be your best move or your most expensive. Ando Chong on what has to be true before you do it.
Family in the business is not a problem. Family in the business without a defined role is.
It works extremely well when the family member earned their position, or is genuinely better at the job than anyone you could have hired externally, or held something together through the hard years and was properly recognised for it.
It can also end a business and damage a family at the same time, which is the worst outcome available, because you cannot resign from being someone's father.
The difference is almost never affection. It is structure.
The role has to exist without them. If the business genuinely needs a project coordinator and your daughter is capable of being one, that is a hire. If the role was created because she needed work, that is support, and it should be called that. Your team will work out which it is within a fortnight and their judgement will be accurate.
The standard has to be identical. Same expectations, same reviews, same consequences. The moment there are two standards, every other employee knows, and you have quietly told your best non family people that there is a ceiling above them.
Someone else should manage them if the business is big enough. Reporting directly to a parent or a spouse makes honest feedback close to impossible in both directions. If you can put a manager in between, do it. It protects the working relationship and the family one.
Family in a business needs clearer boundaries than anyone else, not softer ones. The affection is already there. The structure is what is missing.
The undefined role. Someone is around, helping with things, involved in decisions, with no title, no accountabilities and no review. Nobody knows what they are responsible for, including them. This is the most common version and it corrodes everything slowly.
The unearned title. A family member is made a manager before they have shown they can manage. Good staff leave over this, and usually without telling you the real reason.
The performance conversation that never happens. A non family member underperforming gets a conversation within a month. A family member can go two years, because the conversation is loaded with everything else. Meanwhile the rest of the team watches and draws the obvious conclusion about what your standards actually are.
Two standards tells your best non family people there is a ceiling above them, and they will not say why they left.
Work following you home. Business disagreements arrive at Sunday lunch. Family tension arrives at Monday's meeting. Without a boundary the two systems merge and both get worse.
Family handover is the most common exit intention among Australian SME owners and one of the least prepared for.
The assumption is that a child who has worked in the business for a decade can run it. Sometimes true. Often not, because working in a business and running one are different jobs, and a decade of doing the work is not a decade of carrying decisions.
If a handover is the plan, treat the successor exactly as you would a second in command you hired externally. Real decision authority, real accountability, real consequences, over years. Give them decisions to get wrong while you are still there to see it happen. That is the only preparation that works, and it has to start long before you intend to leave.
The failure mode in Australian family businesses is that everything is assumed and nothing is said.
Roles are assumed. The eventual handover is assumed. The pay is assumed to be fair. Then something happens, the assumptions turn out to differ, and the conversation takes place at the worst possible moment with the most possible emotion attached.
Write it down. Roles, pay, decision rights, and what happens on exit. It feels cold to a family. It is the most respectful thing you can do, because it means nobody discovers at fifty five that they had misunderstood the deal for twenty years.
Hiring family is not a mistake. Hiring family without a defined role, an equal standard and a written arrangement is.
If you are considering it, be honest about whether the business needs this role filled or whether this person needs a job. Both can be worth doing. They are just completely different decisions and they should not be confused with each other.
It works well when the role genuinely exists, standards are identical to those for other employees, and the arrangement is documented. It goes wrong when the role was created for the person rather than the business.
Same expectations, same reviews, same consequences. Where possible have them report to someone other than the family member who owns the business.
Have the same conversation you would have with any employee, at the same point in time. Delaying it damages your credibility with the rest of the team.
Yes. Role, pay, decision rights and exit terms, exactly as for any other employee. Assumptions are what cause family business disputes.
Give them genuine decision authority years in advance, including decisions they will get wrong while you are still there. Working in the business is not the same as running it.
Anderson Chong, Founder of iQuest Consulting and Business by Design.
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