As published in GGI Insider

In today’s hyper-competitive employment market, nepotism has once again become a topic of contention. Job seekers who feel snubbed frequently claim they were overlooked in favor of the owner’s (or hiring manager’s) nephew, niece, cousin, or in-law. The perception is that family members always receive preferential treatment even when they’re under-qualified and unmotivated to perform the functions of their job, and that, in each instance, the business owner either doesn’t care or has no choice but to give the relative the job or face the family’s wrath.

Based on my experience with business owners, this perception rings false. Not every decision to bring a family member on board is an instance of nepotism. Many family members are suited for the business roles they occupy, and the process of hiring relatives rarely occurs without serious deliberation and ethical consideration.

Nonetheless, the stereotype of the entitled, incompetent family employee persists – not because of institutional carelessness
or bias, but because business owners sometimes neglect to address several important factors at the outset.

If you are considering hiring a family member for your business, consider the following eight questions. You may even
want to incorporate them into your interview with the candidate.

1. Why are you considering the candidate?
Think about the circumstances under which you are making this choice: Did the candidate approach you, or vice versa?
Was it at the recommendation of another relative? Ideally, the candidate should fit an existing job description, possess the necessary skills, and be ready to perform the duties of the role. If any of these elements are missing, pause and reconsider the job offer. It may be painful to turn down a relative, but it’s nothing compared to the damage an unsuitable employee could cause to your business and personal relationships.

2. Why does the candidate want the job?
Consider the candidate’s motivation. Again, watch out for any external factors, for instance: a parent, grandparent, spouse, sibling, or child urging the individual to work with you. Instead, hire for intrinsic motivation. Look for shared values, a passion for and knowledge of your business and industry, and a desire to achieve. Ask the candidate the same questions you would ask any other applicant. You may be surprised by the answers.

3. What strengths and weaknesses do you know the candidate already possesses?
There are distinct advantages and drawbacks to the decision to hire a family member. You get the benefit of prior knowledge of the candidate, but you may have to overcome preexisting relationship dynamics if they interfere with the job. If you’ve spent some time with the candidate, you already know their “soft skills,” such as communication ability, emotional intelligence, and self-management.

4. What value will the candidate bring to the business?
Next, consider the candidate’s measurable skills as those skills relate to the job at hand. If you’re hiring for an IT position, for instance, test the individual’s abilities as a programmer, project manager, administrator, and data analyst. This may sound obvious, but many business owners find it deeply uncomfortable to submit their relatives to a rigorous application process. Do not let your discomfort jeopardize your business. While mentoring a relative may be noble, make sure the candidate provides equal or greater value to the company in the long run.

5. Will the candidate be working alongside any other relatives?
Along with individual strengths and weakness, assess the candidate’s prior relationships with any other family members
employed at your business. Watch out for generational conflicts as well as competition between members of the same generation. Depending on the candidate’s role, you may need to staff the individual in a different department or office – apart from their family coworkers – or decide against hiring them entirely.

6. Which came first: the candidate or the position?
The creation of a position for a family member is almost always a recipe for disaster. It disrupts internal hierarchy and
generates confusion and backlash. When positions are created for individuals, they lack coherent scopes and objective
guidelines. As a result, employees engage in power struggles, duplicate labor, and lose morale. Hire a family member only when an appropriate job is open.

7. How would you grade the candidate’s leadership potential?
One significant way a family member can impact—positively or negatively— your business is through their leadership style, or lack thereof. Think ahead. If a candidate does not have strong technical skills, but displays a penchant for management, they may be a worthwhile hire. On the other hand, be careful not to lay the foundation for a leadership dispute if there are others in line, or if you don’t intend to exit your business in the foreseeable future. I will explore this topic in depth later on in this series, when discussing methods for developing next generation leaders.

8. What will happen if it doesn’t work out?
Consider the contingencies of the candidate’s failure. If you have to terminate your family member, how will the decision
affect your relationships outside of work? You’ll need to hold the individual to the same policies and disciplinary actions

that apply to all employees. Finally, ask yourself if you will be able to handle it. If you foresee a difficult choice or bitter conflict ahead if things don’t go totally smoothly, think about your mediation options now, or avoid hiring the person in the first place.

ABOUT MICHAEL N. MERCURIO

Business attorney and M&A lawyer Michael N. Mercurio serves as outside general counsel on matters related to business law, M&A, and real estate law As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on all aspects of business and commerce, with a core specialty in mergers and acquisitions—both from the sell side perspective and buy side perspective.

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