You probably grew up next to a few “family owned” businesses, or have at least seen the tropes of those relationships on television. Although you might have a good impression of your local Italian restaurant or enjoy the drama in Kim’s Convenience, we have a few good reasons why you should not hire family to join you in your business venture.
Homophily refers to our natural inclination to choose people that are similar to us, be it in gender, race or culture. It would also explain the desire to pick a family member to hire as an employee or to go into business with. And it makes sense! Similar attributes can lead to shared values, morals, and personality traits. This, in turn, can lead to better communication and ease the decision-making process. How can agreeing be bad for business, though?
Apparently, not being challenged, while great for keeping the peace, will also lead to less creativity, diversity in thought, and likelihood to engage in innovative behaviour, according to this study. If you’re in a business venture that doesn’t require the aforementioned and would benefit more from having everyone on the same page, then you might still get away with working with family. However, keep reading before you make up your mind.
This study shows that entrepreneurs and new business owners are likely affected by their previous employers, suggesting that they are likely to make similar mistakes. We are more likely to learn (and fully believe what we have learned) when the information comes from first-hand experience. Watching your boss make decisions, then, could be more impactful to your career than all those years at business school, for example. This is where it might pose an issue if you’re working with family, especially if you’re already coming from a family business. You might have too much knowledge based on shared experience from the past, and accidentally sign up to make the same old mistakes.
Even if you and your family member have had different experiences, studies have also shown that in a group setting, experiences that were shared or are similar in nature were often given more weight and importance over the experiences that were unique or deviate from the shared experience. This shows that we have a bias towards shared experience and will often take it into consideration, even if it is the less valuable option.
Finally, comes the most common issue of all: communication issues and disagreements. Being in a business with a person brings forth a multitude of new communication nuances and challenges that most people aren’t prepared for. These are already difficult on their own, to the point where only 23% of cofounders claim that their business relationship is less stressful than their marital one. Now, add the complexities of dealing with family members on top of that? You might feel like you’re walking on eggshells, except the eggs are actually landmines, and you’re also on fire. Trying to keep the holidays from being ruined, then, might be the one issue that burns the business to the ground.
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