The management philosophy of a good friend who I am advising is to treat the team he built to run his startup as a family. I took issue with it. Why? Because the nature of work is temporary and family is permanent.
People work for a living and will likely work at different places and jobs to earn money. Family ties are solid and tend to last a lifetime. Moreover, people have interests go beyond the scope of any job. Family means that people can rely on each other in good and bad times, when it is convenient and when it is not. Of course, I am using the term family assuming it applies in its healthy interpretation: I am not talking about your drunk uncle who beats you for not bringing him the next beer type of family member.
Co-workers are there for you when it suits their interests. Good co-workers will not stab you in the back or hurt you to advance their careers, but they will likely pay close attention to the tradeoff between helping you and helping themselves. That is, they are more conditional. Family relationships, on the other hand, tend to be unconditional.
Finally, thinking of co-workers as family puts a significant barrier to off-ramp people who no longer possess skills that fit with those the business needs. This may cause unnecessarily delays in making critical personnel decisions. One important note, though: It is totally possible for a co-worker to become like family; I highly recommend this be OUTSIDE the boundaries of the firm. That is, a former co-worker definitely can be like family.