There are a lot of advantages to working in a family – run business. The family ties can create a strong culture of values and ethics. There is a natural dedication to family that drives a clear mission and determination to succeed. But there are also disadvantages. For HR reps especially, navigating family – run businesses has its unique challenges. A lack of fairness and consistency in treatment of family and non-family employees can lead to accusations (and even proof of) nepotism in hiring practices. This environment also can lead to constant high running emotions of jealousy and favoritism. Additionally, we are currently in a timeframe where are our workforce is multigenerational – which comes with its own host of challenges. To have a healthy family – run business, HR needs to be a priority. Here are four ways to ensure the lines between family and business are kept clear.
1. Help Leaders Understand the Need for Legal Compliance.
According to a 2014 Forbes article, there are six major reasons that employees sue their employers, including:
- Being fired without reason
- Being fired for bad performance after a good performance review
- Poor timing between filing a complaint and getting disciplined
- Delayed internal investigations
- Improper responses to an Equal Employment Opportunity Commission charge
- Management and HR failing to follow the organization’s own policies
All of these reasons are concerning because lawsuits require a lot of capital, legal problems can damage the company’s reputation in the community, and turnover is costly. It is important to be clear with leaders about the need for consistent performance management and solid policies to help prevent these legal issues. Emphasizing the ramifications for not following through on proper procedures can be helpful.
2. Aim for Objectivity in Hiring.
Organizations should strive to always hire the best candidate instead of hiring a relative just because they’re a family member. To ensure that you’re choosing the best candidate every time and remaining as objective as possible, you’ll need two tools:
- Well – Written Job Descriptions: This will include and isn’t limited to the job title, duties and responsibilities, skills and competencies, relationships to other roles, and salary. A job description sets the expectations for a role and provide a checklist for assessing each candidate. This can curb or prevent nepotism based hiring. If a family member applies for the job and isn’t ready for the position according to the job description, you should select someone more qualified.
- Thorough Job Interviews: In a job interview, the candidate gets a chance to talk about their experience and qualifications beyond what they’ve given you in their written application. Hold multiple rounds of interviews with different leaders at the business to get a well – rounded picture of the candidate. The job interview also gives you the chance to clearly communicate your expectations for the role beyond what is written in the job description.
3. Use Organization Charts to Prioritize Trust and Transparency.
Organization charts define chains of command and the scope of different roles, which helps ensure that people are reporting to the right managers/leaders, promoting organizational unity. These charts also help both family and non-family employees see the opportunities for growth in the organization. Can you recall the last review of your organizational chart? What format is it in? In our growing digital world, is the organization chart accessible to everyone online?
4. Address Compensation Challenges.
Family – owned businesses often have the freedom to design or structure their compensation plans how they want to. However, with this freedom comes parameters. Under no circumstances should these plans result in informal pay governance processes, unclear understanding of the business’s compensation plan, or pay discrimination. Failure to be alert of the current external market can lead to turnover, so family – owned businesses especially need to be aware of what proper pay is for their market. To avoid these snares be sure to hire and work closely with a third party compensation expert in developing a fair and transparent solution for all employees. For 23 years Astron Solutions has been assisting organizations with developing fair, equitable, and transparent compensation solutions. Why not contact us to learn more!
While there are unique challenges to managing a family – run business, creating and enforcing fair policies and procedures can prevent most of these problems. Consulting with an experienced consultant in order to gain an objective view of the current state of the company and create more structure in needed areas can be beneficial. These adjustments will help a family – run business to stay unbiased – creating a cohesive and successful work environment.
Angela Jozsef says
Cassandra, thank you for writing this. I definitely agree.
Cassandra Carver says