Would you (or have you) hire family?

[Jamisjockey]

So, before you answer, let me preface this question with some info.
The family in question would be my FIL and his wife.  She does the same business as my wife, but has not progressed to the same level of management or recruitment, but knows the basics and has been/is being trained by my wife already.  My FIL is one of those rare men who respect thier adult children for what they have done and are capable of doing. 
The quandry we're in is growth of our business.  We're thinking ahead to the next year, and even further down the road.  Both the FIL and Step-MIL are experienced in all the areas we'd need.  My FIL is a retired Marine to boot (Msgt, E8). 
What we need are people we can trust, who can help us grow our business.  We have an employee currently, and would likely retain her as a clerk/receptionist. 
This would mean a significant increase in payroll, but we're already anticipating having to do that in late '07 or in '08. 
The are really the only family I would have work for me.  My dad is quite skilled, but less than 6 years from a federal retirement, and I just don't think he respects us the same way.

Second (related) question, same thread....
I realize everyone's wants and needs are different, but I'd like some opinions.
Given the above situation, if you were the FIL/SMIL......would you rather.....
A) have higher pay
or
B) have bills paid off, paid move, and assistance with downpayment on a new residence?

[The Rabbi]

Be very very careful.
It can work for all the reasons you have mentioned.  It can be a disaster also.
I would write a contract/letter of intent spelling out as much as possible of the job responsibilities, hours, benchmarks for performance, compensation, and causes of termination as you can.  The more specific the better.  Misunderstanding between employer and employee lead to lawsuits and termination.  Similar misunderstandings between relatives lead to all out war.
And if you treat your relatives differently from how you treat your existing employee you will get lots of resentment for favoritism.
As to compensation, ask them.  Most people would prefer the cash but there may be tax issues involved.

[Bogie]

If they're competent and mission-oriented.

I know of one situation where a family member was hired, and he then proceeded to steal, etc... From what was basically his own business. Sad.
 

[HankB]

If your business takes a downturn, could you lay off family as easily as someone you hired off the street?

Think about your cash flow and taxes . . . although it usually just applies to kids working in the parent's business, sometimes family members settle for less actual pay in order to be paid in cash. Business owner wins, employee wins, only the taxman is the loser. (Disclaimer: Not a recommendation, just idle musings of someone who's not an attorney, CPA, small business owner, or anything of the sort.)

Overall, if you have enough reservations to be asking this question of strangers on an Internet forum . . . the answer is probably "no" to hiring FIL and SMIL.

[Brad Johnson]

As stated, it can be Heaven or Hell.  If you hire them make sure they understand that the hire is a business relationship, complete with all the implications of any other business relationship.  Be up front and set expectations.  Your FIL's military background will help - talk to him one on one and lay it on the line.  Ask him point blank if it's going to create a family rift when (not IF) a family-negative business decision has to be made.  As long as they know up front that business is business and family is family (and that the two are mutually exclusive in this case) you will probably be okay.

Brad

[El Tejon]

Keep family and work apart.

[crt360]

Keeping family and work separate might be the safest choice, but sometimes even that backfires on you.  If you have positions that trustworthy family members would be highly suitable for and you hire someone else, you might never hear the end of it.  Especially if the person you hire turns out to be less than great.  If the family member has an expectation that they might be hired by you, the situation could be even worse.

We have numerous small and not so small business clients that are family owned and operated.  Most of them are successful - everyone gets along and does their job.  A few have had problems, but it's less common than you think.  If you know the family members well enough before hand, you can make a pretty good decision about whether they'll fit in your business or not.  I have family members I'd hire to do just about anything and one or two others I wouldn't pay to sweep the floor.

There's another problem with hiring family that hasn't been mentioned.  Sometimes they are very good at what they do, take on a large amount of the responsibility and become indispensable.  A few years down the road they feel like they want to do something else or they get a really good offer to work somewhere else, but they feel obligated to stay because they are family and they know it would hurt the business for them to leave.  Without the family connection, they'd have been long gone with no regrets.

Whatever you do, don't hire anyone with a dependency problem (mainly drugs & gambling).  This applies whether you're hiring family or not, but often people feel sorry for a family member with a problem and think they can help by giving them a job.  The number one cause for family business failure that I've seen is skimming/embezzlement to feed a habit that regular pay won't cover.

Depending on how your business operates it's also very important that you and the family members you hire are able to tolerate each other's presence during the work day.  I have family members I'd trust with the company books, but I'd go nuts if I had to spend much time talking to them every day.

As with everything, it has its ups and downs, but there are millions of family businesses out there that prove it can be done successfully.

[thebaldguy]

Family and business can be bad. Very bad. I've seen physical confrontations between family members working together. Here are some points to ponder:

What happens if your marriage has problems or even comes to an end?
What happens if the business goes under or goes through financial problems?
What happens if theft/mismanagement/bad decisions occur?

No.

[doczinn]

I thought you were referring to the practice I've heard about in India (or maybe it was Japan) of hiring people to be guests at your wedding, so it'll look like you have more friends.

[Monkeyleg]

Last August, my wife went to work for her sister and her sister's husband's plumbing/heating/AC company.

They asked her to come work for them because my SIL simply couldn't do the job, and certainly couldn't do the job while raising two young children.

They asked because my wife is meticulous when it comes to ledgers, cash-flow sheets, invoices, etc.

My wife and I started our own real business in 1987, and there were no disputes. We left the business at the office.

Her sister's business, though, is a nightmare. Cats crawling over the keyboard while my wife tries to work, and kids screaming in her ear.

After just six months, my wife is looking for another job.

Comparing our business to that of my SIL's, the difference is that there were professional standards to be met. And each of us understood our roles.

I don't know if any of the above is of any help, so take it for what it's worth.

[mfree]

When you ask family to work, the "professional barrier" is broken... it never existed.

Family will do things to and with other family members that you'd never dream of doing with a "standard" employee. See the physical confrontation post above.

Another point, as a co-worker expressed quite artfully, is that if your employer hires you and a spouse or family member, and they appear to be treated unfairly or in an undignified manner, it immediately affects your mindset and job status even if the treatment was warranted. You have an *interest* that is other than the businesses.