There's an old Irish saying, "You don't know someone until you've lived with them." I would say you never know a person until you've worked with them. This is why it surprises me that countless people recommend friends and family for positions at their companies without knowing much about their work ethic.
Many of us have been there-a position comes open and you happen to have a friend who is looking for a job. You recommend him because you want to do a good deed (or because your company offers a bounty for people you recommend who are hired). Then that person starts screwing up and the hiring manager looks at you like you gave birth to the person and are forever responsible for every action he does or doesn't take.
Even if a friend personally pulled you from a burning building, that doesn't mean he or she would make a good employee. I would not recommend putting yourself out on a limb for a recommendation unless you have first-hand experience with this person's work habits.
It's even worse if a manager hires a friend for a position on his or her own team. I can't believe this practice is done so much given the minefield of problems that can accompany it. First of all, you have to ask yourself if you'd be comfortable offering a work critique to a person you normally know only socially; it takes a very special, objective person to take such criticism, even when it's constructive, and not hold a grudge. In other words, don't be surprised if, when you ask this staffer/friend if he wants to meet for beers later, that you hear a sarcastic, "I'd like to but I have to WORK ON MY TIME MANAGEMENT SKILLS, don't I?" Just ask yourself what the worst possible outcome could be from the work arrangement and decide beforehand if you'll be able to live with it.
Some managers, of course, hire their friends and don't really care how they'll do in a job. They figure if he falls short, one of the non-friend staffers will pick up the slack. Repulsive.
However, if you're dead-set on hiring a friend or family member, you're not repulsive, and there is no company policy against it, it's best that both you and the new hire are clear going in on the expectations.
Make it clear to your uncle/tennis partner/drinking buddy from the beginning what your expectations are. List the skill sets that are expected, what kind of turnaround time is common, etc.
Explain that although you can be instrumental in getting the person hired, you will more than likely have no say when layoffs come around. Set rules on work behavior; for example, in the office you do not want to be called by your childhood nickname of "Monkey." Express that although you "opened the door" you will not be responsible for what happens within the building going forward.
Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.