Sorry Bro, You're Out: How to Fire a Family Member With…

By the time a family business leader fires a relative, that person’s “Use By” date is usually long past due.

It doesn’t take long for most employees to sniff a spoiled heir or sibling who is skating by. “If he weren’t Hank’s son, he’d be long gone” is the word around the lunchroom table — when only non-family members around.

Related: 7 Tips for a Thriving, Sustainable Family Business That Lasts

What’s a dad, mom, uncle or sister to do when the reality can no longer be ignored?

You should never have to fire a family member if you’ve hired based on natural abilities and shared values, but if you do find yourself in that situation, here’s the approach: Be as objective as possible and as kind as ought to be.

1. Have an exit plan.

If you hire family members, you must be prepared to fire family members. Prenuptial agreements can be helpful in divorces. Discussions of exit processes can be beneficial in family-owned businesses. Foremost during those discussions is the agreement that family members know that having to let one of them go from the business does not mean that they are a failure — or that they are not important to the family. Keep in perspective that you are not, in fact, divorcing a family member when he leaves the business.

2. Don’t wait.

The longer you wait, the worse it gets.

“I gave you every opportunity to succeed,” Sara told her brother, Tom. “You let me down.”

If his problem was lack of skills, he needed more opportunity or training. If it was lack of work ethic, she shouldn’t have made the business a place where he could hide out. If none of the opportunities were the right fit with his innate abilities, her lack of good selection processes was the problem, not him.

Related: How to Run a Family Business Without Killing Each Other

It would have been best if Sara had counseled Tom on his apparent misfit in the company the moment his performance was a problem. Giving him “every opportunity” probably ticked off other employees — who didn’t get the same pass when they didn’t perform well — and whose efforts were probably disrupted.

The longer it takes to get a low performing family member out of the company, the greater the harm to the business and fallout among family members.

3. Tell the truth, but mind your tone.

“It’s because I love you that I have to punish you,” a parent says to the kids as they dole out discipline.

“It’s because I love you that I have to let you go,” is what a boss says when firing a family member. It is wise to add, “Because I love you, I want you to succeed in life.”

There’s no such thing as it “going well” when you’re in this situation, but starting the firing process in this tone removes the burden of having to assess blame. Don’t speak in anger or itemize grievances, since it leaves a terrible aftertaste, but be objective.

Related: 4 Secrets of Blissful Entrepreneurial Power Couples

4. Offer to help.

Show a sincere desire not to stand in the way of the family member who has not been able to shine in the current situation. Focus on the options this new freedom now provides: “This job isn’t letting you use your natural talents. I want to give you the freedom to find a far better fit.”

Remember it’s not a divorce from the business or the family, the business leader is giving the family member the freedom to find greater success in another workplace.

5. Keep business in the business.

Business is business. Hiring, managing and even firing family members is easier if you consistently separate business discussions from family conversations.  

Don’t mix business problems into family social settings. This is the most critical factor in giving you the best chance of maintaining a positive personal relationship with family members who become employees — or former employees — of the family business.

Related: Timeless Lessons From a Fourth-Generation Family Business

Prevent calamities by identifying natural strengths and setting boundaries.

“B schools don’t teach some of the important lessons,” Sara said. “I’d give anything to have taken Betrayals 101. It could have saved a lot of family pain. When I fired my brother, I didn’t realize my dad, the company founder, would think that I had betrayed him. Or that my other siblings thought it meant I cared more about the business than the family.”

A family business leader needs to be especially careful to assure that there is a well-suited role for a relative before hiring him or her. Assessing the nature of the job and the conative or striving instincts of the candidate is key to hiring successfully. When hiring a family member, it offers the objective analysis that is essential to avoiding the feelings of betrayal, on either side, if it doesn’t work out. Additionally, by setting and adhering to those family/business boundaries, a family can avoid the conflicts that come with mixing the two.

Unless you’ve been there, done that, the radiating pain of firing a family member seems easy to pan out. It is not. But, there are a lot of parables about the phoenix that flies from the ashes. The pain can be overcome — the opportunity to have the joy of working well with family members cannot be matched.

Kathy Kolbe and Amy Bruske

Kathy Kolbe is a leading authority on human instincts, chairman of Kolbe Corp. and co-author of Business is Business: Reality Checks For Family Owned Companies. Co-author Amy Bruske is the president of Kolbe Corp. and leads seminars for bus…

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