How to Fire a Family Member from the Family Business?
Nepotism is one of the biggest problems in small family companies.
It was a sparse office with a standard wooden desk and matching bookshelf. Pictures of family adventures and motivational sayings hung on the wall. It was similar to every Mom and Pop boss’s office I often encounter in my work. There were two guest chairs on the other side of the desk. Emmett sat in in the owner’s chair, I was sitting in a guest chair.
“Are you ready?” I asked.
“Yep”, said Emmett, “Let me have it.”
“After careful review and research, I’ve narrowed down the results to one major cause. I believe your biggest problem is John.”
“John, our general manager?” interrupted Emmett, “You’re saying he’s the problem with our lack of growth?”
“I’m saying he is the root of all the smaller problems. He’s anti-social, anti-customer service, anti-growth, anti-positive, anti-everything.”
“Come on, Jerry, he can’t be that bad.”
I waited a beat, “You’re kidding, right? Are you saying you weren’t aware of his negative attitude? He spends most of his day staring out the window or reading the sports section of the newspaper. The rest of the crew know not to bother him or he’ll bite their head off.”
“John’s been with us for 7 years. He has a lot of experience. He’s loyal, he’s responsible, he’s punctual. Hell, he used to be a sheriff in Arizona!”
Shocked and curious, I challenged him, “He makes a lot of mistakes.”
“I know,” said Emmett, “But I can’t fire him.”
“Your business has been stuck for the last three years, your employees and your customers are complaining. Are you going to keep making excuses for him?”
Emmet crossed his arms over his chest and cocked his head back, “You know there are some people who just like to complain.”
I lowered my voice for effect and spoke softly, “He is not a friendly guy.”
He looked sad and confused and I spoke before he could respond, “He has a poster above his desk that says, ‘What part of NO did you not understand?’”
Emmett sunk deeper into his chair, his head rocking back and forth and said, “Well, you’re going to have to find another solution because I can’t fire him.”
Wondering what I was missing, I asked, “Why not?”
Emmett looked up at the ceiling and calmly said, “Because he’s my son-in-law.”
Many small businesses around the world were started by Mom and Pop out of necessity. They became accidental entrepreneurs, working hard for several years while saving every penny to send their kids to “a fine college”.
The natural next step is to hire those kids and bring their newly educated minds into the Family Business.
Small businesses number in the millions and account for more than half the employment in The U.S. They represent the bulk of the middle class. They are the bedrock of commerce and capitalism.
I have the upmost respect for parents who want to pass their legacy to the kids, to keep it in the family.
I also have a sore spot for them because I was the son of a family business, myself. I’ll jump to the end if my story and tell you that, after a hugely successful 20-year run in which everyone made shloads of money, I was unceremoniously fired after the owner, my father, sold me out.
Ever the optimist, I am always thankful for all the lessons I learn regardless of how I learn them.
In the world of Business Consulting, I find Nepotism¹ to be high on the list of problem areas of many small businesses. It might even be tied with culture — or more specifically — the wrong culture.
A Google search for “nepotism in business” brings up 14 results on the first page and all of them are negative.
Nepotism is why Joe Biden is in trouble.
Emmett’s problem wasn’t hiring the son-in-law. His problem was hiring someone with a bad attitude. What’s more, putting him in charge created a culture of bad attitude. When you see it as an outsider, it is plain as day. When it’s your own family, you might tend to ignore it. Until it’s too late.
This is a story I learned long before I started at our family business:
There was a hot dog vendor at a major ballpark who for years sold more hot dogs than any other vendor. People lined up around the stadium to get one his dogs. People paid a premium price for the experience of eating his hot dogs. People came to the game just to buy his hot dogs.
Needless to say, he made a lot of money.
He used that money to send his kid to “a fine college”, (You can insert any pronoun you want for what the kid was and pick a name for the institute) where the kid studied accounting and finance. Upon graduating, the father brought the kid into the business and because he was so proud of the kid’s college diploma, he made the kid the boss.
She wasted no time putting her newly minted money skills to work.
She decided that making the buns from scratch was too expensive and switched to store-bought to save money. She saved more money by boiling the hot dogs in plain water instead of grilling them. She lowered the price of her new, cheaper hot dogs thinking she could sell more. Fresh onions, tomatoes, peppers? Gone. Replaced by bottled relish.
At this point in the story, most people have already figured out the ending and I use it only to make a point — Business is an art, not a science. Business-by-the-numbers is great on paper, but in real life, not so much.
It’s very common in HELP-Wanted ads and job postings claiming, “Must have diploma!”
I see it in ads for, “How to start an ecommerce business” that try to sell you a paint-by-number, one-size-fits-all template of steps to make $100,000 in your first year!
And I see it in Red Ocean² companies with lots of competition. They almost always end up competing only on price — the most competitive situation of all.
Our hot dog vendor sold the best quality at the best price and never used Groupon!
The first thing I did when I took over the family business was raise prices much to everyone’s surprise. But I also, and at the same time, redesigned the culture, which included moving some relatives out of their jobs and into something more suitable.
(note: you may not need to change their salary, just their influence.)
It was imperative that people enjoyed their experience with us so much that they never thought about the price and they couldn’t wait to tell their friends.
The results were that almost 90 percent of our new business came from word-of-mouth - People liked us and told their friends!
Now when I meet with a business owner, before I do anything else, I always ask up front, “Are there any relatives or friends currently working in your business?”
If the answer is yes, I ask for a clause that decriminalizes me just in case I discover they are the problem. I still get paid even if Emmett doesn’t follow my advice.
¹ Nepotism in the Workplace: Things to Look Out For (indeed.com)
² Blue Ocean Strategy & Blue Ocean Shift | Create Blue Oceans of New Market Space with Confidence
If you would like more good advice for your enterprise, check out my new book: What Would the Boss Do? Your company’s culture will determine its success. You are the Culture Creator
