Harvard Business Review published “Should Your Family Business Have a ‘No In-Laws’ Policy?” by Wingspan Founder Christina Wing, and Rohit K. Gera, Managing Director of a third-generation real estate development business in India and the United States. It’s a question that comes up in almost every family business at some point. Someone marries into the family, and before long people start to wonder whether that person belongs in the business too.
Christina and Rohit start with a simple tension. In any company, management should have a strong say in who gets hired. Management has no say, though, in who marries whom. In a family business those two things run straight into each other, and if the family gets the in-law question wrong, it can hurt the family and the business at the same time.
“Bringing the boardroom into the bedroom can quickly become a toxic situation in any marriage.”
The case for keeping in-laws out
In their research, the authors found that families tend to land in one of two camps. Some ban in-laws from the business entirely and keep ownership and jobs for blood relatives. Others welcome in-laws in. Both approaches have real pros and cons.
Based on their own experience, Christina and Rohit say a “no in-laws” policy may be the better choice, mostly because it sets clear rules and expectations from the start. Power struggles are common in family businesses, and a policy like this gives a couple one part of their life that isn’t wrapped up in the rest of the family. It also lets the family welcome an in-law as a spouse instead of evaluating them as an employee. Timing matters too. A policy that’s in place ahead of time feels far less personal than one written after an in-law nobody likes has already joined the family, which is almost guaranteed to breed resentment.
Then there’s divorce. A split in a family business can affect ownership, employment, and reputations, and it can be a huge distraction for everyone. Families can’t protect against all of it, but the authors recommend a prenuptial agreement that protects ownership of the business, along with employment contracts for in-laws who do work there, the same way non-family employees sign non-competes.
Where the rule gets complicated
A strict policy has its own downsides. Rigid rules can drive blood relatives away, too. Children often get “the call” to come home and join the business, and their spouses may have to give up careers of their own to support them. With family-owned businesses making up 80-90% of businesses worldwide, it can be hard for an in-law to find meaningful work anywhere else. And the business may be passing up trusted, capable people, since marriage can bring highly qualified talent into the family.
Some families try to soften the rule by giving in-laws seed money to start their own ventures, sometimes called “go-away money.” The authors note this often goes wrong unless the investments are based on merit and the results are clearly communicated.
The stories in the article show how differently this can play out. One family the authors advised created a no-in-laws rule specifically to keep out a son-in-law they didn’t like. When the father who ran the company died unexpectedly with no family successor, the business fell apart because the siblings weren’t united around a plan. There was another son-in-law who was highly qualified to run it, and the rule kept him out. On the other hand, a tenth-generation beverage company treats its no-in-laws policy as gospel, and it has led to greater gender diversity in the company as daughters take the reins from their fathers.
In-laws inside the business can go either way as well. In one family, a couple moved across the world when the wife’s father fell ill so she could run the company, and her husband set aside his own career to help. The business thrived, but it took real sacrifice. In another, a son-in-law used a falling out between a father and son to push the son out. Once the two made up, they fired him. That led to a rift with the daughter, then a divorce, and eventually the loss of the entire business, since she had split her ownership jointly with him.
Practical steps for families
The authors are clear that there’s no one-size-fits-all answer. What they do stress is keeping in-law ownership and in-law employment separate, because the two come with very different responsibilities and authority. Families also need to think through how reporting, compensation, and evaluations will work. Objectively reviewing a sibling’s spouse, for example, is harder than it sounds, and these issues only get bigger as the family and business grow.
The article closes with ten suggestions for families considering in-laws in the business, and a few stand out. The first is to put family first, since a family in disarray can’t run a successful business. Another is to write down a family work policy that defines who counts as “family” and sets rules for reporting structures, succession, and who is allowed to change the policy. The authors also suggest a compensation and equity committee made up of family and professional managers who report to the board, or an independent advisor if the business is too small to have one. And maybe the most practical: build an off ramp. Most employees are at-will, but family isn’t. Before an in-law joins, know how you’d handle it if things don’t work out. Spell out concerns in advance, document performance, and agree on a trial period.
Whatever a family decides about in-laws working in the business, Christina and Rohit say in-laws should still be treated as family members of the business. That means updating them on the business and its governance policies every year and encouraging them to ask questions. Taking some of the mystery out of the business makes things easier at home. They also suggest setting aside family time where the business doesn’t come up at all. Included the right way, in-laws are often the unsung heroes of a family business, and some of its best ambassadors.
