Who would you rather hire? Your brother in need or a complete stranger?

A Hiscox study answers the question for you. Well, sort of. The small-to mid-sized business insurer conducted a survey of 1,000 small business owners to track family hiring practices. The results: 21 percent employ a family member. Of that group, 43 percent cited the downturn as a reason for recruiting a relative.

Nearly a third (30 percent) of family-run businesses choose to employ a relative to help them find work and 11 percent say it was to help those who had been made redundant. But the benefits were hardly one-sided. A whopping 94% believe that a family hire benefits their businesses.

Let’s drill down into the advantages:

  • 57% say it came down to trust

  • 45% cite reliability as a benefit

  • 44% know their family members “will work hard”

  • 40% point to relevant experience

  • 16% say it creates a recognized family brand


"The silver lining of the tough financial climate has been the discovery of the 'family talent pool'. The trend of SMEs turning to trusted family members who may be available and have the right experience has strengthened their businesses,” says John Heaney, an SME insurance expert at Hiscox.

With advantages, of course, come drawbacks:

43% say there is a danger associated with work-life balance
25% are concerned it will bring family politics into the business

“Understanding the risks to your business means that you can put strategies in place to ensure they don't become a problem,” Heaney says. “For example, think about succession planning and set out a long term strategy so all employees within your company are clear on their role and expectations for the future.”

The conclusion of the matter?

Grant Gordon, director General of the Institute for Family Business, says family firms are a proven breeding ground for entrepreneurship and working in a family business encourages greater resourcefulness as well as teaching family members valuable lessons.

"Overall the family business sector has weathered the recession well and fostering a spirit of entrepreneurship in family members should ensure these firms remain competitive as we emerge from the downturn,” Gordon says.

Check out this video on how to hire top performers.