Tags: CEO

How to Fire Your Mom When Your Family Business Goes Bad

From corporate giants like Walmart to local mom and pop shops, all family-owned businesses mix professional interests with private family interests in a delicate balance that allows the business to prosper and stays true to the vision the family has for the company. But what happens when you make the executive decision to fire an employee who also happens to be your mom? Regardless of the validity of your reason for doing so, firing a family member can still spell disaster for the business and end in lasting animosity between family members. So, here's a couple helpful tips on how to fire your mom when your family business goes bad. 

Have a process for hierarchy:

The best way to handle firing a family member is to not find yourself in that situation in the first place. Issues tend to begin early on during business formation. Consider the business’s long-term future, what stake do children have in inheriting the business, who gets ownership? Should you go corporate, what rights do family members have on the board and what happens when parents try to force children out of ownership or vice versa? What happens when a child or sibling is seen to be unfit for their position? This can all be avoided by setting clear policy that details under what conditions family members will be employed, promoted, compensated, or terminated. If everyone is aware of where they stand in the business and what is expected of them, then many issues involving conduct can be avoided.

Clarity and professionalism are key:

Approach firing a family member the way you would a normal employee. Before calling them into your office make sure that you a have a clear reason for the termination, supporting documented evidence, and a resignation offer that will allow them to walk away quietly should they accept.  Anything that makes the business decision of firing an under performing employee appear to be a personal one that is about family politics must be avoided. Causing the family’s reputation to be damaged in media scandals over such family politics should also be avoided. It is never easy to fire a family member for personal reasons but there are ways to make it easier on the business and to keep the whole process professional.

For more information on employment law and estate planning for your business, contact the Goosmann Law Firm at [email protected] or (712) 226-4000.

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