Hiring family/friends - A review of "Atlas Shrugged"

I just finished reading "Atlas Shrugged" by Ayn Rand. It took me 3 months and the only reason I made it through was because I had the audio version from Audible. There were some long rants, one monologue lasted over 3 hours in the audio version but overall it was a fascinating story with an interesting message. Without spoiling it too much it is about what happens in society when it is ruled by lazy, selfish people.

There were a lot of political and social messages in this book but the main message I took from it was this:

Need should never be the primary reason for giving someone a job or anything else.

The antagonists of the story preached that the world would be a better place if everything was shared among everyone according to their needs. In principle, this sounds like a great idea, but in practice it quickly becomes a disaster.

How does this apply to startups?

And now to my point. I have worked in a number of startups that have hired friends and family members. I've worked at 3 different companies with my wife, I currently work with my bro-in-law and have worked with my closest friends and it has almost always been a good experience.

The trouble with hiring family and friends comes when you hire them based purely on their need, not their qualifications for the job. If I know a person well enough to know I want to work with them, I also have a good idea of whether this person would be a good hire or not. In a startup, every single hire is crucial and every dollar spent on salary is way too important to make this decision lightly based on friendship or kinship.

I've often had close friends ask me to give one of their family or friends a job, "Because they really need it." I am not completely heartless to the importance of need, but I've usually found that if someone desperately needs a job and is unable to find or keep one for a long period of time, there is often a reason. If I don't know them personally, they are going to have to go through a rigorous interview process to make sure they are qualified for the position. I am most likely to be even harder on a distant acquaintance because if things don't work out it will be extremely hard resolve the situation and can harm friendships beyond repair.

If I do know someone well, I know their character well enough to know if they would be a good hire. I personally give preference to someone I know well enough to be sure they are a good employee, even if they may not have as many direct qualifications as other candidates. There are very few things that can't be taught, if I know they are a hard worker and great team player.

Anyone else have experiences working with family or friends that have gone bad? How did you handle the situation and how did it affect the relationship? How about situations that have turned out great? What did you do right in these cases?