In the firing line: A family business guide

“It’s nothing personal, just business … son, you’re fired”.

That’s one way you can go about it, but unlike firing a non-family member who you are probably not going to see again, depending on your relationship, it is likely that you will continue to interact with a fired family member outside of the family business.

Terminating the employment of a family member from the family business may be one of the most difficult decisions you may ever have to implement in your business. But being fired from the family “business” generally should not mean being fired from the “family”.

In many family businesses, the line between “family” and “business” is often blurred. But it is important to set clear expectations of all employees from the outset, and there should be no exception for an employee who happens to also be a family member.

When faced with the issue of terminating the employment of a family member, it is important to focus the conversation on the specific work issues, to remain professional and non-emotional, and to keep other family members away from the process.

Establishing a framework

It is often the case with family businesses that expectations are not communicated clearly at the outset with family members working there. It is never too late to have open, honest and consistent communication with family member employees about their role and responsibilities.

Regular and honest performance reviews are important and 360-degree reviews help to ensure objectivity – something that can be lacking when reviewing family member employees, particularly if termination eventually becomes necessary.

Employment policies are an important consideration. Family businesses may wish to prepare a policy for family member employment, describing the terms under which the family member will commence or continue to be employed, developed, evaluated, remunerated and if necessary, terminated.

Consider implementing family employee feedback meetings, say quarterly, during which all family employee members are encouraged to participate in to share their feedback openly. It may be beneficial to have these family employee feedback meetings facilitated by an external facilitator.

If push comes to shove

When proceeding with the termination of a family member employee, it is important to be clear with your reasons for your decision, and always remain professional.

The termination of a family employee will likely be more emotional than terminating a non-family employee. As such, it is essential to keep the focus on the business and performance reasons for the termination. Importantly, once you have made your decision, stick with it regardless of how emotional the family employee may get. The decision is for the best interests of the business, which may very well be financially supporting the whole family.

When terminating a family employee from the family business, refer to the strengths of the employee and encourage these to continue to be maintained in future employment. Although not a pleasant experience, it is possible for the family member and the business to emerge from the ordeal even stronger.

Given the emotional challenge of terminating a family employee, don’t feel that you need to do this on your own. If possible, involve other members of the management team. This will ease any perception that you are the “bad guy” but at the same time, ensure you assume the responsibility for making the ultimate decision to terminate the family employee.

Tony Kabrovski is a Partner, Business Advisory Services, at HLB Mann Judd and a Family Business Australia accredited adviser.