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How to Handle Issues Within a Family Business

Family can be wonderful. They are there for us when we need it the most in life. In many ways, they are the people you turn to the most during life’s most tumultuous moments. So when it comes to running a business, it would be easy to seek out family to assist you in this endeavor. For some, they are even expected to run the family business and keep it productive for generations to come. 

While the saying goes, never mix business and pleasure, others may agree that some shouldn’t mix family and business. However, family ties and business may be hard to undo and break away from. In most cases, working alongside family seems to work out, and the business runs just fine. 

However, there are issues that can arise when working closely with those we love, or with employees who feel out of the loop due to not being related. Let’s take a look at some of these issues, and what you can do to help alleviate them when mixing business with family.


Keeping it in the family: How to handle issues in the workplace when hiring and working with family members

Recognizing Nepotism 

Nepotism, another word for favoritism specifically towards family, is something that many employees see and face on a daily basis. If you choose to employ family or close friends, it can be easy for others to think that they simply got hired because of their ‘in’ with the higher-level management. People have a hard time seeing past their last name or connection with those who run a company. Regardless of their background or experience

While the simple solution would be to just not hire family or close friends, they may be the right person for the job or position you need filled or have a sincere desire to be a part of your business. However, you get into issues when seeming to create positions just for them or by hiring them for an open spot without posting or interviewing for it first. The best thing you can do is follow your hiring procedure and advise them to properly send in their application and resume. Leave it in the hands of those who hire. If that’s you, then set up an interview like you would for anybody else. 

If you do hire someone close to you, then don’t have them directly report to you. Also, make a workplace policy to ensure that for the future. Even if you don’t have family that comes to work for you, others within your company may, so this keeps it from getting too personal for everyone involved. 


Make Unrelated Workers Feel Comfortable

Managing the relationship with non-related employees is one of the biggest challenges of running a family-owned business. Strain and isolation are some of the feelings that other employees may have if they are not part of the real family. You have to recognize that including your personal life with your business life may make others feel left out or excluded as part of the “family” within the company. After all, your work family is like another part of yourself and deserves to feel appreciated just like your own family would. 

To help with this issue, offer a family picnic or event that’s specific to your employees and their families. You can also do luncheons or other small incentives that show them your appreciation for all that they do. Be sure to emphasize that they are like another family to you and without their hard work, you couldn’t have the company that you do. 

Inclusivity is key. Let your employees know and appreciate them for what they do will help them feel like another family member and not question your judgment in hiring the real ones. 

Read: 10 of the Most Successful Family-Owned Businesses


Stay objective 

Regardless of who you hire, that’s related to you, you can’t help but have a feeling of protection for them. This could be because they are your family, or because those around them may not be the most accepting of them due to their connection to you. Nonetheless, as the owner or manager, you must stay objective when it comes to this person in your employ. This is one of the major things you need to consider if you want your family business to succeed.

Make it clear from the beginning what your expectations are of them. Establish that they are no different than the other employees around them. If you find yourself struggling to do this, then confide in those closest to you about your issue at hand. Having an outside perspective can be instrumental in seeing that you are either reacting protectively or accurately. This will help you take the next steps and better run your company with an honest and objective mindset for your team.


Address Work Ethic Differences

Just because many of the people within the workplace share the same bloodline doesn’t necessarily mean they share the same work ethic. This poses a challenge sometimes when the expectations of workload are different.

Sometimes differences often stem from generational gaps which is why this is more common with generational family businesses. However, this issue could also be due to personal values, or varying professional experiences. Older members may perceive younger ones as less hard-working due to their different work methods. Younger members may see the same for the more senior members because of their responsibilities. For example, a younger family member in a family-owned pest control business may think they are working harder than the senior family members. Perhaps they do more physical labor while the other members handle sales and paperwork. This perception usually causes division if not addressed.

The first step in addressing these disparities is to acknowledge them openly in a non-confrontational manner. Families should foster an environment where each member feels comfortable expressing their viewpoints and work styles. This openness leads to a better understanding of each other’s work ethics.

To bridge these differences, it is crucial to establish clear and consistent standards of performance and accountability. They should apply to all family members, regardless of their roles. This approach ensures fairness and sets a professional tone in the business. Implementing regular performance reviews can also help in objectively assessing each member’s contributions and addressing any issues promptly.


Revisit Roles and Responsibilities

One of the major mistakes family-owned businesses make is not setting clear roles and responsibilities when the business was launched or when members joined the business. There are so many issues that can be avoided if this is done correctly from the beginning. However, if a business missed this step or it has been some time since they reviewed the roles, it is a good idea to revisit this area.

Revisiting roles and responsibilities ensures that the company evolves effectively alongside its members’ growth and changing dynamics. While doing this, you should focus on the business’s current needs and future objectives. As family members grow in experience or as the business expands, roles and responsibilities may need adjustment to align with these changes.

The process should begin with a comprehensive evaluation of the business’s operational needs and strategic goals. This assessment helps in identifying gaps or areas where new roles might be required. Following this with an open discussion among family members. You need to know how everyone feels about their specific roles. Are they based on their skills, interests, and career aspirations? Or were they handed out randomly? This dialogue should be grounded in meritocracy and the business’s best interests, rather than familial relationships or seniority.

It’s also important to formalize these roles and responsibilities. Meaning, write them down clearly in written job descriptions. This formality adds clarity and professionalism. Regularly revisiting and adjusting roles ensures that the business is agile and responsive to both internal and external changes.


Start Members at the bottom

The inspiration for writing this piece actually started when I heard someone tell me how their father had them start at the very bottom of the company before they could ever get to an executive position. I appreciated that their father made them work hard to deserve their role within a company before getting a management-level position. This tactic not only helps your family see what your company does but keeps them in touch with the other employees. 

For any company or organization out there, losing touch with your employees is really detrimental to your business. This is especially true if someone wasn’t in touch at all from the start and never worked hard to get the job they did. Starting a family member from the bottom and having them earn their way to higher-level roles will help them understand what goes into having a business. It will also make them face the reality of if they want to stay for the long haul. 


There is nothing wrong with employing family. Doing so gives them the chance to help you pursue your dream of having your own business. They should be some of your biggest supporters. They probably want you to succeed more than anyone else out there. Just be certain that you are aware of the issues that can arise when employing those whom you hold close to your heart. Even though your family members may be your biggest fans, this doesn’t necessarily mean they will be the best employees.

Also read:

12 Family Business Ideas Any Family Can Start

How to Start a Family Business

Generational Family Business: What It Is and How It Works


This article was first published in 2019 but has been updated and expanded.

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Summer Anderson
Staff Writer: Summer Anderson is a mother, wife, writer and long time lover of the game of golf. Her passion lies in writing from the heart, and on topics that are most important to the Millennial generation. She hopes to impact those through her writing and advice on marketing and social media communication. When she is not on the golf course, blogging or watching "Frozen" with her little ones, she can be found designing websites in her home state of Pennsylvania.

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Staff Writer: Summer Anderson is a mother, wife, writer and long time lover of the game of golf. Her passion lies in writing from the heart, and on topics that are most important to the Millennial generation. She hopes to impact those through her writing and advice on marketing and social media communication. When she is not on the golf course, blogging or watching "Frozen" with her little ones, she can be found designing websites in her home state of Pennsylvania.

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