Firing a Family Member: One of the Hazards of Mixing Family and Business

Date posted: October 25, 2017

By Ty Kiisel

I grew up working in a family business.

As a teenager, I swept the warehouse floor and drove the delivery truck for our family’s industrial supply business. As I got older, I worked my way into field sales and spent the start of my professional career traveling throughout the intermountain west selling industrial products to large construction sites, mines, and refineries. Although it was a good job and I felt like I was pretty good at it, it didn’t take long to recognize that there are challenges associated with working for family that I didn’t anticipate.

That’s why, when Rieva Lesonsky of SmallBizDaily.com asked Barbara Corcoran of Shark Tank fame, “Many small businesses start out as either family-run, or business owners hire family members (for various reasons). What’s your advice on what to do when you have to lay off or fire a family member, and how can you do that and maintain peace?” it resonated with me.

Barbara’s answer was particularly insightful:

“If you need to fire a family member, it won’t be easy and hoping for SOME peace is not realistic. It’s ALWAYS extremely difficult to fire a family member—believe me, I fired my own mother and she WASN’T AT ALL HAPPY ABOUT IT!

“It’s important to 1) be certain and resolute in your decision. TAKE ample time to review the situation and make an informed decision, 2) be clear and candid in your communication. Remember the RELATIVE may not be working for your company anymore, but they’ll still be at your next family reunion. And 3), if you feel it’s appropriate, offer to help them secure their next position and really mean it. Sincere and dedicated actions go a long way in mending hurt feelings, especially with family members.”

My Dad knew our business better than anyone I’ve ever known, but after working in the field for three or four years, it felt like I would always be the boy who needed to be taught how to mow the back lawn, so I decided it was time for me to do something else. Although he didn’t fire me, leaving the family business was tough, and it took a lot of time for my Dad to get over my being a “traitor” to the family business.

Although I haven’t ever had to fire my mother, when I left the family business, my father WASN’T AT ALL HAPPY ABOUT IT. With that in mind, here are four things to consider when hiring family members that will make it easier if you need to fire them in the future.

  1. Don’t do it: If the only reason you are hiring someone in the family is because they are an easy hire and not because you think they are the right person for the job, don’t do it. I once worked with someone who believed that you should hire the right person, not the best of those who apply. In other words, sometimes you might need to go through a few rounds of interviews to find the person with the right skills, the right attitude, and the right aptitude to add value to your business. If that person is a family member (or a friend) hire them. If not, don’t do it.
  2. Allow yourself some distance: Several years later, my partners and I needed someone to work in the warehouse to pull orders, send out shipments, and occasionally deal with a delivery or two. I had a 16-year old son at the time, so they thought he would be the perfect hire. Because of my personal experience, I extracted myself from the interview process and let my partners determine whether or not they thought my son would be a good fit for the job. When he was hired, I made sure I had nothing to do with managing him and on those occasions when my son would ask me questions about what he should be doing on the job, I referred him to the partner responsible as his manager. As a result, we didn’t experience any of the complications related to his leaving us (after a couple of years) that I had with my father.
  3. Set expectations and maintain accountability: I’m convinced that very few people, including family members, show up to work each day with the goal of failure. In fact, I believe that family members often have some additional motivation to be successful—provided you’ve set expectations correctly. Most people perform at their best if they know what success looks like and have some regular accountability regarding their performance. When I’ve been successful at doing this, my employees recognized when they were struggling and actually approached me to help them. And, if their job or role wasn’t a good fit, it was obvious. I believe this is true for family members too.
  4. Don’t take your family or friends for granted: It can be easy to sometimes be too cavalier with how you treat a family member who also happens to be an employee. For example, if you expect a family member to work later, get paid less, or take more of the dirty jobs simply because he or she is a family member, it could hurt your relationship outside of work. What’s more, regularly dropping the “your part of the family” card every time you expect them to work late or do extra can wear thin if that’s the only time it matters that they’re part of the family. I know that in some companies there are family members that get to skate by because they’re family, but I’ve observed that most of the time family is expected to do more. I know that’s how it was in my Dad’s business. Be respectful of that.

Family businesses can be very rewarding, but it isn’t always easy. As a general rule, being aware of potential challenges, taking actions early to avoid conflicts, and establishing a thoughtful and transparent plan for dealing with them probably won’t remove the pain of telling your mother, “You’re fired,” but at the very least, you will know that you did all your could to make it work.

A Main Street business evangelist and author, with 30+ years in the trenches, Ty Kiisel makes the maze of small business and small business finance accessible within a regular discussion of this regular challenge for small businesses for OnDeck.

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