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In-Laws and Order

Think hiring an in-law is just like hiring any other employee? Think again.
April 1, 1999
URL: http://www.entrepreneur.com/article/17550

It's no secret that in-laws working in the family business can be a pain. They may stir up trouble if they're dissatisfied with their working conditions or pay. Or they may become defensive if they think their spouse or other relatives are being treated unfairly. Fearing these negative scenarios, many family business owners are reluctant to hire in-laws.

Statistics show another reason to be wary of letting in-laws in. According to a recent Arthur Andersen/ MassMutual American Family Business Survey, 22 percent of family businesses report that at least one family member has gone through a divorce in the past five years.

As upsetting as divorce may be personally, it can also threaten the underpinnings of a family business. An angry ex-in-law might act as a contentious naysayer to business growth or know enough about the company to share its secrets. Given the stories family businesses hear, it's no wonder many recoil when faced with the prospect of hiring in-laws--even if they haven't experienced divorce or embittered exes in their own families.

"Sooner or later, family companies will have to face the in-law issue," says Bonnie M. Brown, president of Transition Dynamics Inc., a family business consulting firm in Eugene, Oregon. This issue, however, can rear its head in a variety of ways: Family members might fall in love and marry people already working in their business or marry people who can enrich their family's business, or the business might have an opening for a position that a talented in-law could easily fill.

Given the potential for problems, family businesses shouldn't jump into the in-law pool headfirst--trust must be firmly established. By fostering solid relationships with in-laws, you may be able to prevent problems, or at least help prepare yourself and your staff for the future should problems occur.

Trust was a rewarding part of the relationship Stan Mandel had with his father-in-law, Ben Solnick. Mandel is now director of the Center for Entrepreneurship at Wake Forest University in Winston-Salem, North Carolina. But until 1992, he was the head of a retail business started by Solnick's family. Before joining the company, he'd worked for a major consulting firm but had no retailing experience. What he needed to know, he learned under Solnick's tutelage.

"For the 10 years Ben and I worked together, he was very supportive of my doing things differently, and I was supportive of him taking whatever role he wanted," says Mandel. "Actually, it developed into a closer relationship than I had with my own father."

Building this kind of trust with your in-laws is a two-step process:

Step 1: Sharing Information. In-laws often feel left out of the tightly knit family units that work so closely together in a business. And what family business owners frequently don't recognize is that although in-laws aren't shareholders in the family business, they definitely have a stakeholder's role that shouldn't be denied: In-laws are the ones often asked to sign prenuptial agreements necessitated by the business. They have to deal with their spouses' or relatives' erratic or long hours. And they have to listen to endless business discussions during holiday gatherings.

To help them put up with all this, in-laws need to understand what's going on and why. "I urge family businesses to have an annual state-of-the-union address given by the owners to the rest of the family," says Brown.

It's a tradition Charles S. Childs Jr., a third-generation co-owner of Chicago funeral homes A.A. Rayner & Sons, adheres to. "We have quarterly ownership meetings," he says, "and then discuss what we decided upon with management and other family members. It's important that everyone know what's happening so they can be supportive."

Step 2: Getting Involved. The involvement of in-laws usually grows as the business expands. That's also when its need for qualified people increases. "When my mother-in-law, Florence Smith, moved to Chicago from California, she asked if we had any vacancies in the office she could help with," says Childs. "We needed someone who could counsel families that were pre-planning funerals--someone with an insurance background." So Smith went for training and got her insurance license. She now fills an important role in the organization.

There comes a point, says Brown, when a family business asks itself, "What are the risks and what are the benefits of having an in-law in the business?" Usually the benefits are obvious: The person can do the job needed and can be trusted to do it well. But what can you do to minimize risks? Brown suggests working through as many uncomfortable scenarios as you can think of. For example, what if the in-law winds up reporting to his or her spouse? "Raising the specter of what might happen helps people realize the importance of structure and guidelines," Brown says. Guidelines on how disputes will be resolved, who will report to whom, how performance will be measured and the like tend to diffuse the tension that can exist regarding bringing an in-law into the family business.

From there, welcoming an interested and talented in-law into the business is much easier. Says Brown, "Once these issues are addressed, family businesses may find there's good reason for in-laws to participate in the management--and someday even in the ownership--of the business."


Patricia Schiff Estess writes family business histories and is the author of two books, Managing Alternative Work Arrangements (Crisp Publishing) and Money Advice for Your Successful Remarriage (Betterway Press).

Contact Sources

A.A. Rayner & Sons, 318 E. 71st St., Chicago, IL 60619, (773) 846-6133

Center for Entrepreneurship, (336) 758-3689, http://www.mba.wfu.edu/faculty/mandel/

Transition Dynamics Inc.,bbrowntdi@aol.com, http://www.transitiondynamicsinc.com