If you own or operate a family business, you should consider living by the following three rules as you carefully try to lead your company:
RULE #1 - NEVER HIRE FAMILY. OK, I know you have to hire family because it is the family business. But if you have to, hire them like you would anyone else. Interview them and make them go through the hiring process just like any other employee. Hire them into a position they deserve because of their background, education, experience, and ability. Failure to follow these simple but very often disregarded guidelines result in overpaid and under-productive family employees and frustrated and sometimes disgruntled non-family employees.
RULE #2 - NEVER PROMOTE FAMILY. Yes, it is actually OK to promote your family, but you better only promote them if they deserve it. Being related to you does not merit their promotion just as not being related to you merits anyone else's promotion. You will lose your best employees if you do not approach this with great care and concern.
RULE #3 - NEVER FIRE FAMILY. If you would have obeyed rule #1, this never would have been an issue. If times are tough, everybody knows that family will be the last to go, or will they? A well run family business will leave family out of the equation in its evaluation of and overall contribution from each employee. I have seen family businesses lay off their own flesh and blood, and the business was always better off for it.
The underlying theme is this - try and treat everyone, even family members, equally and fairly.