When launching a new venture, many small business owners bring family and friends on board as employees. It’s often a great solution for busy, cash-strapped entrepreneurs. Support from family and friends helps business owners focus on growing their companies, rather than the hassle of hiring.
What happens next is an all-too-common scenario for fast-growing small businesses. The company grows bigger and more successful. But the new pace and scope of work overwhelms some of the original team members. They don’t know how to manage the growth. They make costly mistakes. Or, they take advantage of their relationship with the business owner and slack off. As a result, the business suffers.
Sound familiar? If so, you know deep down it’s time for a change. You need to replace the underperforming or irresponsible family member or friend with someone who can better manage the challenges of your growing organization. It’s a tough decision, but one that’s in the best interest of your company.
Yes, it will be awkward
Letting an employee go is never easy. But firing a friend or family member is a whole new level of tough. Normally, when you fire an employee, you don’t have to worry too much about running into them again. But when you fire a family member or friend, you might lock eyes at the dinner table later that night, or next weekend at the neighborhood block party. Or, you might find yourself defending your decision while passing the sweet potatoes to Aunt Sarah at Thanksgiving. The aftershocks can rock your relationships for years to come.
No, you can’t look the other way
When there’s so much at stake, it’s tempting to keep a friend or family member on staff to avoid conflict. But that’s a big mistake. Your other employees notice when you give family or friends a free pass and ignore bad behavior or poor performance. If you continue to turn a blind eye, company morale will plummet and the quality of your company’s work will suffer. Problems will eventually trickle down to your customers and put your company in jeopardy. It’s a domino effect your business can’t afford.
Time to terminate?
If you’re still on the fence about whether to let your friend or family member go, ask yourself these four questions for clarity.
1. What’s the reason for the termination?
Do you need to lay off employees for financial reasons, or for performance or behavior problems? Gather some data to back your choice. For example, the need to cut costs may justify layoffs, and negative feedback on employee productivity and conduct supports termination.
2. Is the employee failing to live up to job expectations?
How’s the employee performing his or her job duties on a day-to-day basis? Are projects turned in on time and deadlines met, or are tasks falling through the cracks? How would you rate the employee’s attitude? Initiative?
3. Have I talked to the employee about his or her poor job performance?
Many business owners avoid talking with family members or friends about how they’re doing. But it’s important to communicate your expectations from the beginning of the working relationship, ideally in the form of a signed agreement detailing the terms of employment. If you don’t have that, notify the employee about mistakes, and give clear suggestions on how to improve. That way, you’ve laid the groundwork that all is not well, and the termination won’t be totally out of the blue.
4. Would I fire the employee if they weren’t a friend or family member?
Be truthful. Would you accept poor performance from your receptionist (or salesperson, or driver, etc.)? No? Why are you accepting it from your family member or friend? If your employee negatively affects your business, you can’t let emotion overrule your decision to let them go. Take a step back and consider the situation from a business angle. You may want to consider enlisting the help of a trusted business advisor with expertise in human resources for a more objective viewpoint.
Once you make the decision to let your friend or family member go, it’s time for the hard part: breaking the news. Use these tips to ease the process.
Remember that business advisor you talked to earlier? Ask if they can be in the room when you terminate the employee, to help facilitate the conversation and keep it on track if necessary. This is especially helpful if you and the employee tend to push each other’s buttons.
Prepare and practice
Before the interview, review the reasons you are terminating the employee and try to anticipate how they’ll likely respond. You’ll need to stay calm and avoid becoming defensive.
Break it to them gently
Deliver the news as objectively as you can, but with compassion. You’re friends or family after all. Say something like, “This doesn’t mean I don’t care for you. This doesn’t mean you’re not important to us. It just means that this working relationship is not a good fit. And I’m going to do everything I can to help you find something else.”
Give the employee the option to resign
If you give the employee the opportunity to leave voluntarily, it may help to soften the blow, and let him or her leave with dignity and self-respect.
Provide extra support
Always do what you can to make an employee’s exit from your company a smooth transition, such as counseling them about their career options or connecting them with contacts who might get them another job. Because you’ll continue your personal relationship, it’s best to do whatever you can to end the work relationship on good terms.
Laying off family and friends isn’t easy, but often it’s the right decision for your business and the people you care about. When you do it with confidence and compassion, you’ll keep your company’s growth on track and keep the peace at home.
For more tips on hiring and firing, download our free e-book, Employment Law: Are You Putting Your Business at Risk?