Hiring family, friends can be dicey for business owners

Stacey Martino and her husband, Jim, who own Cicero Lawn & Garden in Hamilton County, hired a cousin to be a supervisor
for their landscaping and irrigation business. Then the recession hit and their financial adviser strongly suggested they
downsize the operation.

For Jim, it was a pragmatic business decision: The cousin, despite being a good employee,
would have to go. Stacey knew that too, but for her, the choice involved some serious hand-wringing.

“Even
though we knew we had to do it and we had business advisers saying ‘You’ve got to do this’—even hearing
that from our accountant, who specializes in advising small businesses—it was still really hard,” Stacey said.
“The debate went on for me long after he said, ‘You’ve got to make some changes and scale back.’ It
wasn’t like, ‘OK, I’ll make the change tomorrow morning.’ I really had to think about it, talk about
it.”

Hiring family and friends often can turn out to be dicey, and if the Martinos’ situation is any
indication, it ends up being tougher on women in business than it is on men. Central Indiana businesswomen interviewed for
this story said that, more often than not, their experience has been that it’s best to keep their personal and professional
lives separate.

Separate but equal

Dottie Hancock, owner of Eaton & Hancock Associates,
a document-management company, started the business with a friend—and that worked out well because they each had distinct,
separate duties.

“That helps,” she said. “But by the same token, there were times when it was
like, ‘OK, we have a payroll to make and I’m the only one worrying about it.’”

Ultimately,
they made a pact not to hire friends or relatives because they didn’t want to risk ruining any relationships. (Her friend
and business partner died two years ago.)

“If there was something going wrong, if for some reason my partner
and I hadn’t gotten along, it would have destroyed our friendship, I think,” said Hancock, who’s president
of the Indianapolis chapter of the National Association of Women Business Owners and the former mayor of Carmel.

Deb Peters, owner of Quality Environmental Professionals, an environmental engineering consulting company, is one who opposes
almost all personal relationships in the workplace. She’s had to implement policies against employee dating—“It
doesn’t end nicely”—and she’s lost some friends who worked for her after finding it difficult to be
friend and boss simultaneously.

When it comes to hiring friends, her advice is: Buyer beware. She supports the
idea only if the friend is an equal partner with a clearly defined role.

“Nine out of 10 times, I don’t
think it works,” she said. “It’s hard to be their boss and their friend. It’s hard to keep that separate.
That’s just me; there are other people who swear by it. But over the last 20 years, I’ve seen that it just doesn’t
work.”

Hiring relatives, on the other hand, has worked in her favor. Both of her adult daughters have worked
for the company, and their contributions have been valuable.

Getting personal

Peters
agreed that, in general, women have a tougher time separating business and personal relationships. Women feel it’s their
duty to make everybody happy and make sure everybody’s comfortable, she said.

“I don’t think
men have as much emotional baggage,” she said. “I’m not saying all women have emotional baggage. I’ve
always had an emotional investment. I always felt responsible for people. If I had to fire someone, I felt I had a lot of
failure if they failed, that it was a poor reflection on me. It’s taken me many years to realize I’ve given people
a fair opportunity and the performance is all in their court, not mine.”

Andrew Keyt, executive director
of the Loyola University Chicago Family Business Center, said there’s no research to prove women have a harder time
than men when they enter into business relationships with friends and family.

“But you can make an argument
that women have a more [amicable] style, women want more peace and harmony,” he said. “It’s a greater concern
to them, so that might influence their decision.”

Keyt said hiring relatives or friends generally works best
when the new hire has:

• a real interest in being part of the company as part of his or her career,

• qualifications that can be useful in moving the business forward,

• enough maturity to have a strong
sense of who he or she is in the world, and the choice to come into the business as the right thing for him or her.

Gail Zabel, a partner in the local consulting firm 2 Women Entrepreneurs, said a problem with hiring friends and relatives
is that they tend to expect special treatment.

“And women, being nurturing and not wanting to screw up relationships,
don’t want to destroy them,” she said. “So they get guilt on two sides: ‘Gee, you’re starting
a business and I could sure use a part-time job,’ or ‘Gee, you won’t have time to spend with the kids and
how’s your husband going to do?’ You end up with a lot more pressure than you really need, an extra stress level
that men don’t normally face.”

That said, Zabel thinks there are “incredible opportunities”
within your own family. As a kid, she started working for her father, a commercial artist in Denver, and it taught her a work
ethic and integrity, how to work under a boss, and how to do work and do it right—all while earning her own money.

But, said her business partner, Willow Townsend, those who do hire friends or relatives need to put them through the
same evaluation they’d use before hiring anyone else. She recommended asking: Can this person do the job? Are they suited
for the job? Can I work with them?

If you start out thinking you can, then find out you can’t, Zabel said
the easiest way out is to “make the work disappear.” But in cases of full-time hires, she advises relying on strict
human-resources rules.

“You go through all the steps to terminate them just as you would with any employee,”
she said. “In many respects, it’s more difficult on an emotional level. But in some ways it’s easier on
an employer level, because either they’re not competent at what you asked them to do or they expect the special privileges.
Go through the steps of counseling with them and see whether they’ll straighten up or maybe come to a meeting of the
minds that this isn’t working. Maybe you’ll save that relationship, maybe you won’t.”

Second
time’s the charm?

The thing to remember is, even if it doesn’t work out right the first time,
it might the next. When the Martinos, of Cicero Lawn and Garden, needed to hire someone to help in their newly streamlined
operation, they went back to the family and hired another cousin.

Stacey Martino was hesitant; Jim thought everything
would be fine. And it has worked out well, Stacey said, because this cousin has the do-it-all skills they needed.

When it comes to hiring relatives or friends, she said, there are positives and negatives.

“The good is,
you’re familiar with them. The bad part is, if you have to part ways, whether it’s their decision or yours, it’s
family. So you’re concerned about everyone involved. It’s hard to not be concerned.”•