Common sense will tell you that you shouldn't hire friends and family. Why?

It's harder to manage them, since they know the boss (you!) They might slack off. Or take feedback a bit too personally. And influence your other employees all at the same time.

True or false?

Well, from my personal experience, it's both true and false.

It was 2008, and I was $50,000 in debt without any employees. My stepdad Bill got laid off from the automotive business he was working at, and I roped him in to work for my company. My mom came along to help as well. With their help, my company started growing faster than I could've hoped for.

But on the flip side, I've also had to fire some of my friends whom I hired, and let me tell you -- this sours relationships very quickly. My best friend whom I recruited wasn't performing at all, and I had to let him go a few years back -- we've hardly talked ever since.

So, how do you avoid the pitfalls of working with friends and family, and manage them (plus the rest of your team!) to create great results? Here are a few ways:

1. Define everything black and white on day one.

You need to set the right expectations from the start of the working relationship, and nothing is more effective than communicating these in black and white. You want to protect both your business interests, and your personal relationships, from any damage.

Here's what I do: With my lawyers' help, I create an airtight contract that defines the job scope clearly, and includes non-compete and non-disclosure clauses. Then I walk my new hire through the entire thing--making sure they know what they're getting themselves into--and get them to sign it.

2. Have a buffer between you and your hire.

Look, we'd all like to think of ourselves as fair and impartial, but it's impossible to be 100 percent unbiased, especially when you're dealing with someone you know and love. So leave the work of managing your family or friend to a different person in your team. This eliminates the possibility of you unconsciously favoring your friend, and makes it easier for your hire to accept criticism and feedback from their manager.

For those of you who are running a small business without many employees, it might be hard to do this. In that case, simply make it clear to your hire that you're their manager--and not their friend or family--during working hours.

Consider addressing them more formally: "John" instead of "Johnny," for example. If they start talking about personal stuff, interrupt and ask them to focus on the work at hand.

It's all about establishing the right boundaries.

3. Measure their performance based on results, and only that.

Define and track the key results each job role should deliver, and revisit these metrics from time to time. At the end of the day, you should be treating your friend or family hire like any other employee: if they don't deliver, and aren't contributing, they should be let go. Don't cut them slack or close one eye just because they're your friends or family.

At my company, we rate all our employees based on their performance, and give them feedback so that they know how they're performing. If someone is consistently not pulling their weight, they'll be off the team sooner or later.

Hiring friends and family can be risky, but I believe that the outcome really depends on your management skills. If you apply the three tips I shared, there's really no reason why you can't hire your friends and family, and have it work out well.

Published on: Jan 26, 2018