A family business faces challenging choices, both moral and financial, when considering whether or not to employ family members. A successful family business can often afford to employ many family members without financial hardship. Does this mean that it should?

Hiring productive family members is a good thing in a business from a succession perspective. However, unproductive family members can create ripples within the business that can be far reaching such long term financial hardship on the business, other employees not being able to advance and unclear governance within the business. Any one of these can be damaging to the business, both short and long term.

Some best practices to consider. Prerequisites to be an owner of a family business – these criteria should be defined by the family as to the criteria/expectations for future owners of the family business. These could include, from a best practice point of view:

a. Minimum work experience outside of the businesses.
b. Required post-secondary education.
c. Minimum age.
d. If the next generation had a relationship, then would ensure that they had a pre-nuptial and appropriately crafted will.

Consider carefully a family employment policy and communicating this with the family before hiring family members.

Learn, think, apply!