Should I Hire my Best Friend?

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Hire your best friend? Or your brother? Or your aunt? You must be crazy. Or maybe you’re a genius.

There are pros and cons to every business decision, and this one is no exception.

Why You Should Do It

• You love your friend, and you want to help him out. Nothing wrong with that.

• Your brother is someone you can trust, and you can’t have enough employees who will show you loyalty.

• 

  Is your friend that guy? Be careful about hiring that guy.
  Flickr/Meghan Dougherty

  You’ve known your aunt for 40 years, and you know her strengths and weaknesses. There will be very few (negative) surprises if you hire her.

• Your good friend knows you well. He knows when to give you some space and when you need some words of encouragement.

• In some areas, there can be tax advantages to it. In the United States, businesses that employ family members can get tax deductions for “reasonable compensation,” which in certain situations can redirect income from higher business rates to lower personal rates. (Fair warning: the IRS has the right to question whether compensation is in fact reasonable.)

Why You Shouldn’t Do It

• Your friend takes advantage of the fact that he’s your friend. He arrives late, leaves early and takes more sick days than anyone else.

• Your sister is a great person, but she just doesn’t have an aptitude for your business.

• Your uncle has a lot of experience in your business, but he can’t stop treating you like you're 10 years old, and he doesn’t give you the respect you’ve earned, especially around other employees.

• Your buddy is smart and ambitious—a little too ambitious because he acts like he’s the boss. Maybe he’s the Alpha Dog within your group of friends, but he’s acting the same way at work.    

• Your cousin is convinced he should earn more than the guy who’s doing the same job “because blood is thicker than water.”

• Hiring your friend is the easy part. Promoting him is difficult because other employees may assume it happened only because of his relationship with you. Demoting or even firing him can be even harder, because of the impact it will have on your personal relationship with him.

If You Do It

You can see that there are a plenty of pros and cons to hiring a friend or family member. If you do it, here are some rules:

• Always act professionally in the workplace.

• Create a clear job description for your friend or family member.

• Make sure your friend is governed by the same policies and procedures as every other employee, and that the entire team knows this.

• Establish specific hours for your friend, even if he’s a part-time employee.

• If you do decide to pay a friend or family member "more than they're worth," keep that private. Make sure that both he and HR know the importance of not communicating that with anyone.

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