March 14, 2018

Of course, you love your family members. But let’s say you hired them — and their spouses and children — to work in the family business and one of them is not working out. In fact, an outside consultant has told you that the person is incompetent, destructive to the business morale and should be let go.

This is a nightmare for a family business owner: How do you fire a relative who just isn’t up to par?

The chances are good you will have to face this challenge at some point in the development of your business. And the closer the relationship, the more difficult the challenge. You have to be aware of the effect that could have on your home life. And whoever the relative is, the prospect of terminating a family member is sure to create stress for you as the individual may seek allies among the relatives to start pressuring you, one way or the other.

Actually, the process should start long before this situation arises. Every family business should have a written policy that describes the conditions under which relatives will be hired, promoted, evaluated and fired. In many companies, relatives of owners and executives aren’t held to the same standards, they’re held to higher standards because other employees can become demoralized if they see family members slacking on the job, demonstrating a bad attitude or taking special privileges.

If the situation of dealing with an under-performing relative does come up, here are six steps to help ease the task:

1. Follow Good Business Practices

Despite stress and family pressure from other relatives, hiring and firing are business decisions. If someone isn’t up to the job, there must be change. Fundamentally, you need to decide which comes first, the business or the family, keeping in mind that if the family doesn’t take care of the business, it may not be there to take care of the family.

2. Remain Open

The process of firing a relative can be drawn out. But you should begin with frank, honest communication with the individual.

3. Consider Special Training

Perhaps the person has a skill that is underdeveloped but could be valuable to your business. This may require some effort, but you could assign the individual to special projects that will help develop those skills. Or you could have the relative work with a top non-family employee who can assume a mentoring role. In some cases, the key is to find a way to turn the relative into a productive employee. But the person needs to become productive in a reasonable amount of time — this is not simply a way of avoiding the issue.

4. Contemplate Alternatives

If you absolutely must fire the person, you may need to consider some form of employment counseling. Perhaps you could encourage the individual to start a business in a noncompetitive line, or find the person a job with another company.

5. Limit Family Debate

The first thing a family member facing termination may try to do is find support among other relatives. While you may want to listen to some of them, not everything that happens in a family business is open for discussion. This is particularly the case if the relative coming at you plays no role in the business. Do not hesitate to politely tell these people to back off.

6. Document Reasons

Be as empirical as possible, tracking how the individual has performed and outlining every reason you believe the situation is not going to work out. Be as detailed as possible.

It may turn out that the person will leave without damaging family relationships. If you are clear about your reasons, the family employee may recognize the need to leave. You may be able to offer the individual the option of resigning with a good severance package. In some instances, exiting relatives are even relieved to no longer work in the family business. They may only stay out of obligation. In those cases, leaving the company can be handled to the satisfaction of almost everyone involved.

© 2018