It is tempting when you first start your business to use family members as “staff” rather than go to the cost of employing “outside” help. You know the person you are working with and if that person is also an owner, it can help in reducing your costs.
Many successful corporations started as family businesses and remain so today, such as the Darrell Lea confectionary group and Bob Jane T-Mart.
Using family to help in the business, particularly in the start-up phase, is quite common in the small business arena. As the business grows, many companies still retain that family interaction.
In fact, according to a survey produced by Monash University on the Australian family and private business, approximately 83 per cent of private sector companies are family businesses which employ 50 per cent of the workforce and represent an estimated $1.2 trillion in wealth.
Most of the businesses surveyed revealed that they employed close family members as a means of reducing overhead costs and minimising problems.
In fact, roughly 47 per cent of spouses are involved in the day-to-day running of a family business while sons and daughters are the preferred choice for involvement in management teams.
The Benefits Of Family
One of the more obvious benefits for using family members in a business is the family’s willingness to go the “extra mile” because it is their reputation which is on the line.
This can have a positive effect on any staff who are not family members. Often they will want to try harder and are inspired by the dedication of the family owners. In fact, some eventually come to consider themselves “defacto” family members and will share in family social occasions.
There can also be less “personality clashes” when working with family as you know each other’s strengths and weaknesses and cater for them accordingly.
Then, as previously mentioned, there are the reduced costs. If family members, such as the spouse, are part-owners then they are not covered by the Award system and are recompensed the same way as any owner.
The Drawbacks
Like any family, nothing is perfect. While you can minimise disputes by working with people you know and understand, the drawback is that any dispute can flow on from the business into the home.
This is the hidden pitfall of family businesses – failure to keep business separate from the home life. As a result, it can lead to failed or soured relationships with family members.
And like over-performing family members who inspire staff, under-performing family members have the opposite effect. Non-family staff will lessen their efforts or resent having to do extra work to cover for an under-achieving family member.
This usually happens when a family member is employed just to give him/her a job regardless of whether he/she has the appropriate qualifications.
Unfortunately, if a family member lacks interest, qualifications or the skills for the required position, then neither the business, the family or the person will benefit from his/her employment.
At the same time, if any family member is employed and is not a part-owner in the business, then they are subject to the same rules and regulations as other employees, including Awards and superannuation etc.
This also includes termination procedures. You must fulfil your legal obligations when thinking of dismissal, regardless of whether the person is a family member or not.
So you must think carefully before employing a family member who is not able to adequately perform the required tasks.
Friends As Employees
Using friends as employees is fraught with the same pitfalls as working with family. While you think you are doing a friend a favour, you may actually be harming your own business, particularly if your friend is not qualified for the position.
Unlike family, friends do not have a stake in the business and may even become a drain on your resources.
You have the same legal obligations to friends as you would any other employee. However, if you dismiss a friend, you could also be terminating a friendship.
Think carefully before you hire a friend and ensure your friend has the ability to undertake the job quickly and effectively.
Tips For Working With Family & Friends
Establish rules and regulations for operating your family business from day one and outline the role each person will undertake.
Create a job description for each person in order to minimise problems or misunderstandings, just as you would for any other employee. Many conflicts can be avoided merely by stating where the different responsibilities begin and end.
Leave work issues at work. Don’t take disputes home. This just causes more aggravation.
Don’t employ family members merely because they are family or employ friends “just to help out”. Make sure they have the required interest and qualifications otherwise your business could suffer as a result.
Encourage family members to get “outside” experience which can then benefit the company.
Outline steps for the resolution of disputes. This will help alleviate family members picking sides and the dispute escalating. This is extremely important should other people buy into the family business at a later date. Ongoing family disputes could lead to a lack of confidence in the company.
Obviously, as a new business, your family will be your first option when it comes to help in your store. Eventually, however, you will need to consider employing “outside” help, especially if using your family is not a viable option for your business.
