Should companies treat their co-workers as family ?

Contrary to popular belief, I strongly believe companies should NOT treat their co-workers as family.

Instead, I believe that companies should treat their co-workers as part of a community.

And the fundamental reason is this:

In a family...

In a family, you care for the individual irregardless of their flaws and transgressions - even if it brought harm to the family. 

If a child is problematic, a family would still care for him/her, even if it led to more harm in the long term.

While not all families are like that, most are. 

However this scenario can only work in a family situation, where the number of people impacted is small. As the number of people increases, so does the likelihood of a dysfunctional family.

However, in a community...

Communities focus on the group as a whole.

Think of it like a crew of a ship. If a single individual's existence could cause the entire ship to sink, the community will let him go.

While it is possible to still support and nurture the individual, problematic outcomes that last for an extended period of time will resort to the community as a whole being severely impacted.

In Sunzi Bingfa 孙子兵法  (The Art of War by Sun Tzu) & my own interpretation,

Treat your generals as family and they will take care of their families for you.

Perhaps at the beginning, but as the company gets bigger it gets harder to "treat everyone like family".

I would say its okay to do it in the beginning, but as the company grows, proper processes to handle employee emotional wellbeing is crucial.

It starts from the top.