logo
Can a family member be fired from the family business?

Can a family member be fired from the family business?

One of the biggest challenges in a family-owned business is firing an underperforming family member. Although a complex process, running a successful family business means recognizing a responsibility to the business and all of the employees of the business. The situation at hand should be dealt with integrity and maturity. The leadership would be under question if non-performers are allowed to carry on in the business. Although the initial reaction of the family member who is being terminated will not be one of acceptance, if the process is handled as objectively as possible, over time the relationships among the family members may be preserved.

Any business, whether it is a family owned business or not, cannot afford to retain people who are not carrying out their roles and responsibilities.Like any employee, the job performance of family members should be reviewed regularly. All negative job performance should be thoroughly documented and there should be enough documentary evidence to demonstrate why the employee is not meeting the job expectations. The person set to be terminated should be given a chance to correct his/her performance.By the time of termination, it should have been made clear that their performance hasn’t been up to par in specific areas.The relative should also be assured that the decision is entirely business-related, not personal.

Approaching the matter with sensitivity and good communication, can limit the emotional damage to and by following the procedural tips listed below, it can also ultimately strengthen them.

 

Keep the separation between business and family clear. Although for the ultimate good of all family members, including the terminated person, the business must come first; firing a family member from the business does not mean excluding him from family affairs and commitments. Ask if there is anything you or others can do to make him/her more comfortable. If he refuses to talk about it, schedule a time to check back and keep that commitment.

 

 A written policy should be there in place which describes the conditions under which the family members will be hired, promoted, compensated and, also terminatedIf you have done your job properly and defined the criteria people will often resign and walk out the door with dignity, rather than being fired.

It is imperative to have an impartial third person present during termination. A third person can help keep the emotions in check and also serve as an impartial witness in case disputes later arise over what was said.

 A written policy should be there in place which describes the conditions under which the family members will be hired, promoted, compensated and, also terminated. There should be a family employee code of conduct that goes beyond the workplace performance and also covers behavior in the community.

 

Once the decision has been made, don’t severe ties with the family member. Help them in whatever way possible to transition to a new employment opportunity. Stress on the importance of both family relationships and business needs and offer to help them find a path forward.

 

BLURBS

  • Like any employee, the job performance of family members should be reviewed regularly
  • A written policy should be there in place which describes the conditions under which the family members will be hired, promoted, compensated and, also terminated

BOXES

  • There should be a family employee code of conduct that goes beyond the workplace performance