Your uncle's family has a real estate business, and
you've got a family business that needs to expand its quarters.
Should you hire the relatives to be your brokers?
You and your cousin start a business together. Because capital
is at a premium, you use your father, an accountant, to do your
books; your aunt, a public relations specialist, for marketing
advice; and your sister, a Wharton grad, to help you create a
business plan. What could be better than intelligent and loving
help that's freely given?
Your family owns a successful restaurant, but it doesn't
have room to absorb all the siblings, nieces, nephews and cousins
who'd like to work there.Some members of the family branch off
and form their own bakery, hoping to supply restaurants in the city
with breads and cakes. Should you hire them to supply your
establishment with baked goods?
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Contracting with family members to provide services for your
company sounds like a great deal. You're working with people
who care deeply about you and whom you can count on to give you the
best rates. You're also helping kin--without having to put them
on the payroll.
"Chances are it won't work out," warns Leslie
Dashew, a family business advisor and head of The Human Side of
Enterprise, an Atlanta organizational development consulting firm
specializing in family-run businesses. The biggest problem?
Underperformance, says Dashew. You may pay less for goods or
services if you're a relative, but as a result, you may not get
the same service as a client that pays full price. If you
don't, it's hard to complain to kin, so you may have to
swallow the annoyance, which builds up resentment, or put it on the
table, which can jeopardize your personal relationship. On the
other hand, if you pay full-market rates for the family
member's products or services, you might end up wondering if
it's really worth it.
Hiring your family members as consultants or suppliers is
different from hiring them as employees. As employees working for
the same company, you're all pulling in the same direction. You
all want your company to prosper because everyone benefits. Family
members working in other companies have different priorities,
however. They're worried about their own businesses, not
yours.
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).
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