• Thu, Jun 23 2011

Is Hiring A Family Member Worth The Risk And Judgement?

This week our friends at Mogulite tipped us off to a story about Wipro Chairman Azim Premji who just made his son Rishad Premji vice president of the company. Rishad joined the 122,000-employee company as a business manager  in 2007 and has been promoted very steadily since then. It is quite easy to run up the corporate ladder with no obstacles when your dad owns 80% of the company.

Though Rishad may be smart and have the leadership skills (I mean his dad obviously has those characteristics) to do this job, a lot of people are going to wonder if a guy that only started at the company four years ago is qualified to run an operation with more than $8 billion in assets. People, including me, wonder if this guy only got the job because he is the son of the chairman?

Promoting or hiring a family member in a business that isn’t entirely family run brings in a lot of scrutiny. People either assume he only got the job because of his DNA ,which the person may start to believe themselves even though they are qualifed for the job, or the person really is not qualified for the job, which makes everyone look bad. Nepotism can be a very ugly thing.

Marc Kramer, a writer for The Street.com, wrote “I have worked with companies whose policy was to encourage nepotism with the idea that hiring family would instill loyalty. On the opposite end, some of my clients prohibit hiring any family members for fear of clouding people’s judgement or influencing the person to whom the new hire is related.”

Kramer wrote there were definitely certain perks by taking the nepotism route:

  • If they are close family you hopefully know where their strengths and weaknesses are
  • Family members, for the most part, are loyal to eachother
  • If things get bad for the business they will hopefully tough it out with you

But he added that there was more downside than upside usually in these situations:

  • Managers that hire family either expect too much or way too little which can create a bad office environment
  • If you have to fire a family member that is going to make Thanksgiving dinner really awkward for everyone.
  • Lines are blurred. Family members tend to forget that inside that office it is a business relationship.
  • Family may tend to ask for higher salaries.

If you do hire a family member, your best bet is to establish these rules right away, according to Kramer:

  • Make sure these people are qualified or willing to get the experience to become qualified.
  • Have the family member directly report to a non-family member. It will help the situation if you aren’t directly in charge of them.
  • Pay them what you would pay any other employee for the same job
  • Sometimes firing a family member is for the best if they are not right for the job. It may actually save the relationship.

 

 

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  • Eileen

    If it’s for entry-level, I don’t see hiring a family member as a huge problem, but if I were the family member, I’d leave as soon as I had some experience.

    Unless, of course, it’s the “family business,” and all the employees are in the family (by which I mean a restaurant, not the Mob, just to be clear).