Objectively, most of our clients would agree that hiring relatives, friends, and previous employees is not a good idea. In fact, some companies have policies about nepotism and rightfully so. Hiring friends is not much different and never accepted.
Great Risk
If most people agree that hiring relatives and friends has more risk than great return, and is not a good idea, why do some do it anyhow? Well, it is hard to say. Probably the major reason is most managers think it's "different" with them. They apparently think that their management style is so superior to others that they can make it work when others can't. Not completely wrong, ...but close. Rarely does it work. It doesn't simply because blood is thicker than water. We've all heard it, but it's true. Unless relatives within a firm are distant relatives or actually work in different locations, the company or boss's effect on one person simply effects the other in the same family. There is a tendency to hire relatives because we may think that since they are related to us or others within the firm, they will have more loyalty, more commitment. They do. But not to the employer! They have loyalty and commitment to each other. It's too easy to have "them" vs. the company. In general the relationship of an employee to a company is usually an independent, individually, personal relationship. The employee performs and is compensated for his individual effort. Once one's family enters into the relationship the relationship is no longer on an individual type basis. Every time one of the "family" employees is promoted, demoted, reprimanded, or fired it effects the feelings and attitude of the other family members.
The relationship of the employee with the employer is changed or can change based on an external relationship that has nothing to do with business. In the other direction, we have seen the business environment adversely effected by an all of a sudden poor family relationship. A divorce between two employees of the same firm creates havoc. The whole thing is just one aspect or facet of the business endeavor that can too easily work out poorly, so we ask why take the chance in the first place?
One's Own Relative
Managers that hire their own relatives, put themselves and the employee or relative in a no win position. If the person is successful it will be because he is related to the boss. If he is a failure it's because he is related to the boss. It’s just a can’t win atmosphere and situation for everyone. The employee is judged too much in the light of his relationship with the boss. A real crunch comes in trying to fire a relative of another employee. It can't help but effect the relationship -with the relative that stays. Even in an understandable layoff situation, feelings of resentment will seethe. Most businesses can ill afford that kind of feeling on the part of any employee. Things are usually tough enough.
Spouses
The most typical form of family hiring comes in the form of spouses owning or managing an organization. The reasons for this in the embryonic stages of a company are obvious. In the early years of a company, this arrangement is an economic necessity. It can be comfortable, even advantageous for this arrangement to continue for a while. The risks of this kind of nepotism can, however, make things difficult as the company grows. Employees are often confused as to whom they actually report to. Personal relationships between spouses and their employees just get strained. Our opinions on this won't really make a difference. Spouses will continue to run businesses. The key is to recognize the point in the growth curve where such an arrangement detracts from the business endeavor. All of us can objectively recognize that blood and business rarely mix.
Friends
Hiring friends can be as risky as hiring relatives. In a perfect world this can work and when the business endeavor goes well, it may be a great relationship, but when thing don't go easily (which is most of the time), either the business relationship of the individuals ends or their friendship ends or, as in most cases, both. Ever try to fire a friend whom you hired as a result of your friendship? It isn't easy on a friendship basis. We don't really know people as well as we think we do. We put ourselves and our friends in a very awkward position when we hire them. It's too easy for people to feel the other guy can take advantage of them. Most of the time, somewhere in the relationship, someone does.
Previous Employees
Hiring previous employees rarely works well either. Except for rare instances, the reason why a person left in the first place never changes. It's like returning to your hometown, things are never quite like they used to be. There is an ego rush on the part of many employees that goes with the idea of someone coming "back into the fold." Rarely do cultures within organizations change enough to really effect the way people feel about who they have worked for before. Cosmetic changes don't overcome these feelings. Employees often want to return to previous employers out of desperation and familiarity. Neither reason is valid and such a relationship normally winds up the same way it did the first time.
