Recruiting Family Members - Dos and Don'ts

By Carole W. Tomko, EVP and Partner, The Woodmansee Group

Whether you are an executive in a family owned business, or a large public company, there comes a time when you are faced with the question whether or not to hire a family member.

In a privately held organization, this is a common occurrence, less so in a public company. Regardless, the considerations as to when, where and how to hire a family member are the same.

In this article I will examine the process managed in two different ways with two different outcomes.

A company that I will call TTG was a developer, manufacturer and seller of automated data warehousing software. The company, started from the ground up in 1991, has grown from a two-person organization to a global employer of over 1000 employees in 15 different countries. The founders remain at the helm of the organization, fulfilling the roles of CEO and President respectively. The two are brothers. Both of them were very interested in having their children come in to the business in some capacity in order to take over some day. After numerous discussions between themselves and the children it was decided that the CEO's son would come in as head of sales and the President's daughter as Chief Legal Counsel.

Within a few months it became evident that the President's daughter was unhappy. She had been "recruited" by her father and uncle from a large and prestigious firm where she was on the partnership track. Beverly, I will call her, thought she would find the business more compelling and was drawn by the potential for ownership. Once she became fully engaged, however, she found she missed the intellectual challenge of the work content she experienced with the firm. As a result of her unhappy career choice, she remained disengaged from the business and avoided all but "necessary" interaction with other executives.

Meanwhile, her cousin Jack was thrilled with the job. The problem was the customers were less than thrilled with Jack's ability to have his team follow through on time commitments. Jack's lack of experience at managing people created a snowballing of problems.

In due course Beverly gathered the courage to leave and return to her law firm. Unfortunately Jack's Dad and Uncle are still suffering with him in the sales role. They have hired executive coaches, counseled him, covered for him and had others cajole him without much effect. It remains to be seen how this will work out long term for the organization.

The second company which I will call "DTH" is a large property management firm with offices nationwide. Their work primarily consists of leasing large commercial office buildings in large metropolitan areas as well as some suburban office parks. This company like TTG is still run by the founder, but has recently become a public company. The founder, a father of five, has recruited two daughters and one son over the last twenty years to work in the firm. His daughters run sales and operations and his son is the company CFO. Jim, the founder, was very thoughtful in terms of staffing plans in the early years of his organization. He hired well and listened to his Board's advice regarding organizational development.

All of his children had significant experience in other businesses that were related to the DTH business. This was a result of both desire and long term career planning on the part of the children combined with Jim's requirement that they "prove" themselves elsewhere before joining DTH. As the positions his children eventually filled became available Jim went through a process with his key executives and board members of:

  • Identifying the detailed specifications of the position to be filled.

  • Outlining the key characteristics of the successful candidate

  • Defining the experience and skill sets required to do the job effectively at DTH

  • Identifying a search committee and outside consultant to help identify and evaluate candidates.

In each case Jim's children were looked at against a slate of external candidates with similar backgrounds and experience. Ultimately they were selected for their respective jobs based upon objective criteria. While it is true that there was some subjectivity in the process, it actually required that each of Jim's children be not just equal to, but more competent and experienced than their competition.

Having been selected for the right reasons in a rigorous process established each of Jim's children as a credible executive coming in the door. Their respective performance in the jobs they hold has confirmed the wisdom of recruiting them in to DTH.

Based on my years of experience combined with that of my colleagues, it is clear: when recruiting relatives in to your organization, give the process the detailed, objective and rigorousness it deserves. You and your family will be better for it.

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