How to Manage Friends and Family Who are Employees

Posted by Larry Siebert- Associate Business Advisor, Oklahoma Small Business Development Center on 10/14/2019

[1] Hiring for the Position:  The real temptation is that hiring a friend or family member is easier

than going through the typical posting, resume – application research and interview – selection process. Some Small Business owners would rather “trust “that the friend or family member is a better selection due to the previous existing connections.  Is the person they are hiring really the best candidate for the position?


[2] Expectations: I believe it is imperative that the Small Business Owner and the Employee,

Friend or Family member clearly address expectations on both sides before the onboarding process. This conversation is an opportunity for the owner to clarify the company policies, individual goals and set healthy boundaries. At the same time, it affords the Friend or Relative an opportunity to clarify any concerns they may have regarding their role, compensation and the future expectations they may have regarding the position they are filling.


[3] Dealing with Open Conversations:  If the owner has set boundaries, established expectations and agreed on keeping things professional, then when “issues “arise and they will, there is

an avenue that the owner and employee – relative or friend, will have to approach what might possibly be an uncomfortable conversation.  If this was a “favor “in the initial hiring and without the guidelines above, the results can be a monumental train wreck. 


I believe the key to avoiding this early on is a periodic performance review, beginning with 30 – 60 – 90-day reviews. The same review that the Business Owner would afford other team members. This allows the “Employee, Friend, or Relative to provide feedback and share their immediate concerns.  This is an opportunity for the Business Owner to discuss goal performance, the employee’s “fit” within the company and employee’s engagement in the business. This can be a positive time of reinforcement and direction.


The “Uncomfortable” piece of this review session is addressing nonperformance. I have found that in being “fair “to the employee, friend or relative, is also having taken the time to conduct those honest reviews – conversations mentioned earlier.  The employee should not be surprised when he or she is invited to an exit interview regardless of their role or relationship.


[4] Finding a balance between existing relationships and accountability can be challenging for

Small Business owners. Whether it’s the time invested in addressing perceptions the existing employees have of how Friends and Relatives are treated or the reality of listening to the honest feedback from those same employees. The Small business owners time is limited to say the least and carving out time for course correction is not necessarily at the top of their list. The decision not to take the time in this case comes with a price tag ... lost relationships and hiring – training another replacement.