The Benefits of Employee Handbook Practices for a Family-Run Business

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Does a small business owned and operated by a family need the professional employee handbook management practices used by other small to mid-sized companies? The short answer to that question is “yes,” but most family business owners would disagree. After all, we are talking about family, here. Do you really need protection practices like a handbook, safety policy, notification compliance and employment documentation to work with your wife, children, brother or other family members?

Absolutely. Regardless of whom you employ, both state and federal laws require that you treat your employees equally, safely and inform them of their rights. Family is still entitled to unemployment compensation, OSHA protections, equal rights and workers compensation in case of injury. (There are some exemptions for family members who are part owners.)

Unclear Lines of Communication Can be Cleared up with An Employee Handbook

The lines between family and employer/employee relationships get blurred with the business. This can cause breakdowns in how efficiently the business runs as well as resentment in the structure of the business. Treating your family as families at home, and as employees at work clarifies those boundaries and improves relationships all around.

What about the perspective of non-family employees? Managing relatives to a different standard than non-family employees is a real morale killer and one of the best ways to guarantee continuous turnover. Professional employee management practices ensure that everyone is pulling their weight and not taking advantage of the clan connection.

The professional employee handbook management practices used by larger companies do more than protect a business from unemployment or workers compensation claims or lawsuits. They create a structure for employees to do their best. Employees are the most productive when they know exactly what their duties are, and the standards they are expected to meet. Having things like a handbook, job descriptions and procedures for handling conflict creates an atmosphere of security. Employees take their job more seriously because they know their paycheck isn’t subject to family politics.

All of that may sound like a lot of paperwork, but there are affordable management systems available for the small business. An hour or two on a slow afternoon and you are ready to manage both groups for maximum productivity.

The final point I want to make is that over the years, I have worked with many small business owners who placed complete trust in their family employees. They are stunned to find out their son has stolen from them or their daughter is having an affair with a married employee. These are the kinds of situations all companies guard against. In the business, the son doesn’t consider taking without asking is stealing because it is “his” money. The daughter doesn’t consider her behavior inappropriate because “who’s gonna fire me?’

The family-run business can create a sense of entitlement of ownership in members who have no ownership position. Brothers will enter into bad contracts they are not authorized to negotiate. Sons will decide to go in a direction that the true owners have not approved if the proper management structure has not been put in place. Setting boundaries for family is more important, in my opinion, than for non-family employees. It protects this all-important asset that supports everyone – the family business.

I own and operated such a business. I know that we start businesses to make a better life for the people we love the most. But just because they are related to us doesn’t mean they don’t make mistakes or poor decisions. Professional management practices, including an employee handbook, allow members to grow and learn in the business without putting it at risk. And that is why even a family-run business needs human resources management systems.

Here’s an excellent summary of ways to mitigate tensions in this type of business, provided as a free PDF download by the Small Business Administration.

And, of course, our own “Your Employee Handbook” contains clear, concise, and fair policies that will help improve communication among all employees, including family members. Click here for more information.

— Jackie Wells Smith
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