When Family Ties Bind Business Relationships

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Are you considering working for the family business? Maybe you’re Father owns and operates a construction company, or your Uncle has a restaurant. Whatever the business may be, if it’s family run there are a few things you should know before committing yourself long term. 

Here are a few questions answered about some of the most important aspects of entering into business with a family member, courtesy of The New York Times.

Q. The bleak job market has you considering working in a family member’s business. What are the biggest differences between working for relatives and working for strangers?

A. Keep in mind that relatives are typically focused on relationships and loyalty, whereas in business the focus is on goals, competence and growth, says Greg McCann, a professor of family business at Stetson University in DeLand, Fla., and author of “When Your Parents Sign the Paychecks.”

When the two are combined, the results can be mixed. On the one hand, “Working with or for family can be a source of strength, because you have trust, shared values and long-term commitments to each other,” Mr. McCann says. On the other hand, relatives sometimes take advantage of their relationships by coming in late, leaving early or trying to get paid more, he says.

One of the biggest risks of working for a family business is that if something goes wrong, the damage can go beyond the job to your personal life, he says.

Q. What kind of due diligence should be done before taking a job working with relatives?

A. Make sure there is a path for advancement, says David R. Specht, a family business consultant and a lecturer in family business management at the University of Nebraska’s College of Business Administration in Lincoln.

When working with relatives, Mr. Specht says, you often must manage your career, because there may be no formal process for promotion or development. “Discuss what kinds of hurdles you’ll need to overcome to be a leader there; otherwise you could wind up as more of a hired hand than as someone on a professional path,” he says.

You want to know up front what your long-term job prospects are and what could limit you. “If it’s your brother’s business and he’s got three daughters being groomed as successors,” Mr. McCann says. “you’ll probably never make it to the top.”

Ask about contingency plans. Mr. Specht says: “If it’s your uncle’s business, what happens if he dies or is disabled? Does the business dissolve? Make sure there is a succession plan in place.”

Q. Because you needed a job, a spot was created for you in a relative’s company. Might employees there — especially those who aren’t family — resent that?

A. “There could be a lot of friction with nonfamily employees, who are worried about the tough economic times and know the business isn’t hiring,” Mr. Specht says. “They could feel their own jobs are now in jeopardy.”

It’s important to view the position as an opportunity and not just as a place to park yourself until the job market improves. Hold yourself to a very high standard, advises Graham Chapman, who took a job with his father’s marketing firm, 919 Marketing Company in Holly Springs, N.C., after graduating from college in 2009.

Mr. Chapman — who had few job prospects at the time — started in an entry-level spot but was soon working in a new position developing new business. “I was concerned about being in a situation where others at the firm resented me and thought I was getting favors,” he says. “To avoid that, I knew I would have to work harder than others and have results fairly quickly.”

Q. Even though you’re working with family, should you have an employment contract or other written agreements in place beforehand?

A. If the business owner is a fairly close relative, a formal employment agreement is probably overkill, but you should have a written description of your role and responsibilities and the organizational structure, says Mark T. Green, a partner in the Family Business Consulting Group who works in Salem, Ore., and a clinical professor of family business at Seattle University. “Work as much out as possible upfront, like expectations about compensation, perks, even what happens if things don’t work out, because if you leave you still have to see these people at family gatherings,” says Mr. Green, whose consulting group is based in Marietta, Ga.

Q. Even if it wasn’t your first choice in terms of a career move, what are the benefits of working with family?

A. You will likely wind up with exposure to more parts of the business in a shorter time frame than you would in a corporate setting, because of your access to top leaders, Mr. Green says. Many family-run businesses are small, and that will probably give you the opportunity to wear different hats.

There is also a feeling of loyalty and a sense of mission when you work with relatives. “You want to win for the family. There’s a feeling of ‘If I do well, you do well’ that gives the job purpose and meaning,” says Larry H. Colin, co-author of “Family, Inc.”

Mr. Colin says family members often have a greater tolerance for mistakes and bad decisions than nonfamily members and are generally more willing to accommodate work-life balance.

Working with family isn’t always easy, he says: “But when it works — and it works a lot — there’s nothing better.”

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