HR and the Family

Retailers working with family know it can be hard to be objective when employing family members. You might have more tolerance with the struggles your own family members face than you would with those of another employee. Addressing issues with family members can be more difficult than with other employees, and it can be easier to put off those conversations as long as possible.

David Karofsky is senior consultant with The Family Business Consulting Group. He has extensive experience helping family businesses be successful in areas such as leadership transitions, strategic planning and conflict resolution. Here are a couple of best practices that can help preserve family harmony.

Set boundaries.

Families who want to minimize conflict in the future should start by setting boundaries. When Karofsky consults with a family, he encourages them to create a code of conduct for the business. “Many times, families run into problems when they don’t set the rules of the game up front,” he says. “How do you know what is out of bounds when you don’t establish the rules? There’s no right or wrong answer; it’s just what works for each particular family.”

For example, a code of conduct might include a family employment policy, which spells out expectations for every family member who enters the family business. Do family members go through the interview process like everyone else? Do they need a certain level of education or years working outside the family business before coming back? Are they required to work their way up through the company before they can take on leadership? Should there be a certain job available in the business before hiring, or will you always give family members an opportunity? The answers will vary depending on the family.

Whatever code of conduct they adopt, family members should not enter the business with a sense of entitlement. That damages their relationships with other employees and may put them in a position for which they’re not prepared. When boundaries are clear, then it’s also easier to monitor performance. When the rules of the game are clear, if it becomes necessary to terminate employment, then it’s easier to have the conversation.

“You can tell the family member that they haven’t met the performance expectations you’ve laid out along the way,” he says. “That is better than surprising the person because all along you’ve led them to believe they’re doing a great job.”

If you’ve set clear boundaries and open communication, then you should be having regular conversations about how the family member is performing, and catch problems long before they get out of control.

Lend your support.

Sometimes, it may be necessary to actually fire a family member. If the firing is about poor performance as opposed to a position not being a good fit in the family business, it becomes more difficult. How do you start? Realize you play two roles, first as an employer, then as a family member. It’s best to start by getting the support of other family members.

“For example, if dad owns the business and one of the kids isn’t performing, dad should first sit down with mom and talk to her about it to make sure they are on the same page,” Karofsky says. “If mom doesn’t support it and dad makes a decision without consulting her, that’s a dangerous place to go.”

When it comes to the actual meeting about the termination, start any conversation by letting the person know that you care about them, which should be no different than the way you approach any employee. Let them know it’s not personal and that you are still family.

If at all possible, part ways on good terms to avoid any embarrassing situations for both the employee and the business. As much as possible, protect the reputation of both parties and don’t create a situation where a disgruntled family member will cause further division.

Karofsky says the best illustration he’s ever seen is a cartoon with a retailer and his son sitting in the office. “In the first frame, the retailer has a hat that says Boss, and he says something like, ‘I’m afraid this job just isn’t a good fit for you, we’re going to have to let you go.’ In the next frame the retailer has a hat that says Dad, and he says, ‘Son, I heard you had a hard day at work today, let’s talk about it.’”