By Doug and Polly White
Hiring and managing friends and family members is an issue that many entrepreneurs encounter on a daily basis. Why? Because, in our experience, entrepreneurs primarily hire friends and family members to fill their employment ranks. Is this a good idea?
We interviewed one CEO who told us she had to fire her sister “ twice! Shortly after hiring her sister, the CEO realized that it was a mistake and terminated her. She told us that it was a gut-wrenching decision. However, the CEO family was so upset that she begrudgingly hired her sister back. Big mistake — she fired her again within a couple of months. The CEO confessed that the holidays have never been the same.
Good start, bad ending
Unfortunately, this story isn t unusual. We worked with another CEO who hired a very close friend. In fact, his friend had been his first employee and had done anything needed in the early years. However, as the business grew, it became apparent that his friend could not be successful in the more technical roles required under the new business model. Against advice, the CEO could not bring himself to terminate his friend. Instead, we all watched as the employee struggled and became increasingly frustrated and unproductive.
In the research for our book, “Let go to grow: Why some businesses thrive and others fail to reach their potential,” we asked more than 100 CEOs of small and midsize businesses, How do you ensure that you get the right people in the right jobs? With few exceptions, they were relying on family members or on current employees to bring in their friends and family to fill the open roles. While this might be expedient in the short term, it is inherently limiting. A friend or family member might be the best person for the job, but probably not.
Then why do entrepreneurs turn to family and friends to act as employees when there are plenty of talented individuals looking for work? While most small business people are great at doing the primary work of their business, they feel less confident about finding, choosing and managing employees. No one is born knowing how to hire and manage people. The good news is that these are learned skills.
How to hire well
Developing a few simple techniques and creating a plan will help you to find the best employees for your organization.
1. Know what you need. What are the behaviors needed in the role? What level of cognitive capability will the person need to be successful? We have found that you can train people for most entry-level positions but that you can t teach honesty, a strong work ethic or a positive attitude. We tell our clients, Hire behaviors, train skills.
2. Understand what you have to offer. You may not have the same benefits that the big dogs down the street provide, but you have other things to offer. Can you provide flexible schedules, a role with broader responsibility or a mentoring relationship? Small businesses often can offer things their larger competitors can t.
3. Cast a broad net with a narrow focus. Look beyond family and friends. Talk to your local colleges, trade schools, churches and civic organizations. Post on Craigslist and LinkedIn. Don t be afraid to receive dozens of resumes and applications. If you have thought through exactly what you need in a new employee, you can go through the stack quickly and focus on the promising few.
4. Leverage multiple methods and opinions. Instead of screening, interviewing and selecting an employee completely by oneself, involve other people and use multiple interviews when hiring. Use group or panel interviews. We are amazed how often two or more people can hear the same thing differently. Enlist managers and human resource professionals, subordinates, coworkers, consultants, customers and vendors in the process. People discern different strengths and weaknesses, giving you additional perspectives. While the final decision still rests with the hiring manager, varied insights and observations will improve the quality of the hire.
5. Trust but verify. Entrepreneurs hire people they know because they trust them. Unfortunately, this does not ensure a trustworthy employee. Many of the small business people who told us stories of theft and fraud explained that they had completely trust the person who had stolen from them or they had known them for years. Do your homework. Check backgrounds, past employment and verify education. Learn how to spot the fox before they get into your henhouse. It is possible to learn a lot about a potential hire, but it takes work. It is worth it.
We are not saying that hiring friends and family members is always a mistake. Obviously, we are family and work together successfully. However, managing people you care deeply about puts additional burdens and pressures on your relationship “ ones that can be difficult to handle. In our opinion, casting your net beyond your immediate circle can greatly increase your hiring and your business success.
Doug and Polly White are principals at Whitestone Partners, a management-consulting firm in Midlothian, Va., that helps small businesses build the infrastructure they need to grow profitably. They are also co-authors of the book, Let go to grow: Why some businesses thrive and others fail to reach their potential (Palari Publishing 2011). The book, which explains how entrepreneurs can avoid the most common pitfalls as their businesses grow, is available at www.WhitestonePartnersInc.com.