Mark Ford on Why You Shouldn’t Hire Friends or Family

This interview was originally published in the May 23rd, 2011 edition of The Palm Beach Letter

The interview was conducted by Tom Dyson, publisher of the same publication.

Tom: I’d like to talk about a topic I’ve been thinking about lately—going into business with family and friends. What’s your view of nepotism?

Mark: Actually, it’s funny you asked that. Just last night I had dinner with an old friend. Our sons were best friends when they were young. A few years ago, his son went to work for him. Now, at twenty-eight, he’s president of the company, and he’s making big money. My friend asked me if any of my kids were working for me.

I told him that my first two sons are making their own ways in the world. But my third son, who’s graduating college this year, has expressed an interest in the family businesses.

“He wants to follow in his dad’s footsteps?” my friend asked.

“Not exactly,” I replied. “He just wants to step into my shoes.”

He laughed.

“But that would be great, wouldn’t it?” he said.

I wasn’t sure how I felt. What I want most for my children is for them to be independent and kind. Working for my business—is that independent?

Tom: I guess that depends if he has a real job.

Mark: Exactly. The last thing you’d want—for your kid or your business—is to pressure your son into the business. Nor do you want to offer him a secure way of receiving income.

Tom: Is that what your friend did?

Mark: Not at all. His son is the real deal. He’s really running the business. And it makes his father proud. Having his son work for him has allowed my friend to take on a secondary role in his business. He is able to work less and spend more time traveling.

Tom: That’s a good thing.

Mark: Yes, that’s a good thing. But in my experience, it happens rarely. More frequently the child is over-promoted, and it causes problems. Sometimes it wrecks the business. Sometimes it wrecks the relationship.

Tom: So how does one prevent that?

Mark: By following three rules: make sure they start at the bottom, let them earn their own promotions, and never let them work directly for you.

Tom: I get the first two. But why wouldn’t you want your child working directly for you?

Mark: I’ve hired friends and family before. When I followed all three rules it worked out fine. It was clean. But I’ve also broken the third rule and had them report to me. Half the time that got messy.

Tom: How so?

Mark: In a few cases, they disappointed me, and that lowered my estimation of them. Other times, I disappointed them—usually because they thought I was being especially tough on them (which was probably true). That lowered their estimation of me.

My personal relationships are more important to me than my business relationships. Having a friend or family member report to you risks ruining you personal relationships. I won’t do it anymore.

Tom: You said that half the time having friends and relatives working for you didn’t work out, and you explained why. What about the other half?

Mark: The other half worked out very well. And I’m happy for that. But I’m not willing to risk my personal relationships based on a 50/50 chance.

Tom: I noticed that the last film you produced listed no fewer than four of your family members on the credits.

Mark: (Cough, cough) You got me there.

Tom: Do I smell a bit of hypocrisy here?

Mark: If it were not for hypocrisy, I’d have no good advice to give at all.

Tom: Seriously…

Mark: It so happens that four of my siblings and two of my children have experience in the movie business. It was a low-budget ($500,000) movie. They were willing to work cheap. Nepotism, in this case, was good for the balance sheet. And strictly speaking, they didn’t report to me.

Tom: No?

Mark: (Cough, cough) Can we get on to another question?

Tom: What about the idea of creating a family business? What’s wrong with creating a business that you can leave to your heirs?

Mark: In theory, nothing. If you build an enduring business, it is natural to want to make it available to your offspring. But history shows us that, for the most part, one’s children will destroy the business. And if they don’t, their children certainly will.

Tom: That’s very cynical.

Mark: That’s history. Look at all the mega-businesses built during the industrial revolution. How many of them still have family members at the helm?

Tom: I can think of only one. Ford Motor Company.

Mark: Me too. The truth is, I like the idea of one of my kids taking over one of my businesses. But he’s got to earn it based on his accomplishments, not on his blood.

Tom: What about the equity in your business? What do you think about leaving that to your children?

Mark: Now you are talking about inheritance. That’s another big subject.

Tom: One we can talk about in depth another day. But give me a hint. Do you intend to leave any of your businesses to your kids?

Mark: Well, I can’t talk about that honestly. My wife and I have told our boys that they won’t inherit a nickel from us. We’ve told them they have to make their own way in the world.

Tom: So you are lying to them?

Mark: You seem to be exposing parts of my personality I would rather leave hidden. What are you, my publisher or my shrink?

Tom: Okay. You’ve said enough for today. We’ll talk about inheritances next time.

Mark: So long as the interview is published posthumously.

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