Is family ruining your business? Fire them, Lemonis says

Is family killing business? Fire them, says Lemonis
Is family killing business? Fire them, says Lemonis   

Blood is thicker than water but when it comes to mixing family with business, success might be better achieved working with strangers.

Sure, knowing each other so well can be a bonus, but that same closeness grants an easy ability to push each other's buttons. Adults can revert to childhood behavior and treat each other in ways they'd never treat regular employees.

"Typically I encourage people not to hire family members," said Marcus Lemonis, CEO of the multibillion-dollar company Camping World and star of CNBC's "The Profit."

Lemonis invests in "sick businesses" to turn them around both in real life and on the show. His latest project is Courage.ba family-run clothing company with seven retail stores in the New York City area.

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Despite generating more than $5 million in sales last year, Courage.b is operating in the red; and it's happening because of a family power struggle.

"There's a big dilemma between who's really in charge of that business," Lemonis said. "And in order for this business to succeed there has to be one clear leader."

If you must hire family…do it right

Marcus Lemonis with family co-workers at Courage.B on "The Profit."
CNBC
Marcus Lemonis with family co-workers at Courage.B on "The Profit."

Even though he doesn't recommend it, Lemonis said if family members do get into business together, they must clearly define roles and set expectations of who does what.

"I would even tell you that the standards and the expectations of a family member will always and should always be higher than an average employee," he said. "If family members slack, why couldn't everybody else get away with it?"

It's also important to create a reporting structure so that relatives aren't supervising each other; instead, each is spread out across the enterprise.

Lastly, anyone who isn't properly doing their job must be disciplined in the same way—blood or not, Lemonis said.

Don’t drag employees into family drama

The workplace is no place to air out dirty laundry, but it's often where families in business spend most of their time together and where a lot of drama plays out.

When tempers flare at the office, other employees likely get dragged into the mess. That's one of the worst things an owner can do in business, Lemonis said.

"The employees have a hard enough time working, let alone shifting whom they're supposed to work for and what they're supposed to do," he said.

Family members must respect each other, especially in front of their co-workers.

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If family just can’t cut it, fire them

Family members and co-workers at Courage.b on "The Profit."
CNBC
Family members and co-workers at Courage.b on "The Profit."

The best way to deal with family members who don't pull their weight or who cause problems within the business is to take them out of it.

"It's not Thanksgiving dinner. The goal is to make sure the business is profitable," he said. "If they can't contribute in a meaningful way, they're politely, sometimes impolitely, asked to leave.

Any boss who's had to fire someone knows it's a terrible feeling, but at least nonrelatives aren't likely to reemerge after the fact.

"Firing a family member doesn't take a lot of talent but it does take a lot of guts," Lemonis said. "When you fire a family member that's going to linger forever."


The Profit, a reality series with multimillionaire Marcus Lemonis turning around companies like Courage.b returns with all-new episodes on October 14 at 10 p.m. ET/PT.