From the April 2012 issue of Investment Advisor • Subscribe!

A Friendly Face

Contrary to conventional wisdom, hiring friends is usually an excellent strategy

I’ve been writing a lot lately about practice management strategies derived from real-world experience that often contradict traditional business school theories, and I’d like to continue that trend with some thoughts about a commonly held taboo: hiring friends. Hiring friends, either of the owner or of employees, is generally considered to be a bad idea because it can create the perception of favoritism. Yet, while those problems can certainly arise, I’ve found that they are relatively easy to deal with compared to more serious problems that can occur by hiring employees who don’t get along with their boss, their manager or the other employees. I encourage my advisor clients to hire friends whenever they can—and advise them to actively encourage friendships to develop between their employees.

I’ve come to these conclusions about hiring friends after years of dealing with the problems that arise when employees don’t like each other or their boss: lack of cooperation, low morale, low productivity, high stress levels, cliques and a generally toxic work environment. As I’ve written many times, happy employees are great employees. I’ve found the converse to be just as true: Unhappy employees are unproductive employees. The bottom line here is that it’s virtually impossible for employees who dislike each other or their boss to be happy in their work, which ultimately will create a mediocre business at best.

Starting out with established relationships is a lot easier than developing new ones. With that said, it’s also important for firm owners to support their employees in becoming friends. Eating lunch together, going out after work, office functions such as parties or even group activities all will enable employees to get to know each other better and help them start becoming friends.

These friendships are important not only because employees will be happier, but because friends make better teams. When people get to know and like each other, not only are they more likely to overlook their little quirks and deficiencies, they are more likely to work together and to step up and help them do their jobs better when needed. As we all know, working well together is what makes teams great.

Employers should actively screen job applicants for their potential to fit into their team and become friends with current employees. I’m not talking about becoming life-long friends, but nothing will screw up a great team faster than bringing in an outsider who doesn’t fit in or get along with coworkers. That’s why it’s very important to have employees spend time with anyone under consideration for a job and to get their perceptions about what this person will be like to work with and whether they will fit into the team.

What’s more, employers can’t eliminate the friends issue even if they try. The reality is that some employees will become friends whether their bosses want them to or not, and firm owners are better off knowing about existing friendships—and monitoring them for potential problems—than having employees hide their friendships, leaving potential problems unchecked. As I said, workplace friendships can cause problems, and even though they are easier to deal with than the opposite situation, they are much harder to deal with if an owner has to wait until the problems become unavoidably obvious. What’s important is how workplace friendships are structured and managed.

There are generally four kinds of workplace friendships: Those that develop between employees; that develop between the boss and an employee; hiring a friend of an existing employee; and hiring a friend of the boss or firm owner. While each of these friendships comes with its own challenges, there are some general rules for workplace friendships of which both employees and employers should be aware.

First, working relationships are different from personal relationships, which all workplace friends need to recognize and accept. In a business relationship, the requirements of one’s job and one’s firm—and in an advisory firm, the needs of the clients—generally should take priority over friendship demands. While there can be exceptions to this rule, they are very few and far between.

In most business interactions, professional judgment and responsibility should take priority over friendship. This includes assessment of job proficiency, promotions, choosing project partners, sharing information and everything in between. It’s important that workplace friends understand the necessity for this level of professionalism so that their friendship doesn’t become a detriment to the success of their firm.

The perception of favoritism, with or without a basis, can also become a problem for workplace friendships of any kind. While this is most common with employer/employee relationships, coworkers can also feel that employee friends support each other more or tend to choose each other for special projects.

There are also pitfalls that come with each type of workplace friendship, which have their own sets of solutions:

Friendships that develop between employees. These are usually the least problematic friendships because they don’t involve a transition from an existing personal relationship or the complications that arise from employer/employee dynamics. Still, when two employees form a personal relationship, it can create resentment among other employees who may feel left out. It’s important for all employees of a firm to be friends to at least some degree. Usually, simply being aware of this issue and making an effort to be inclusive will go a long way toward making everyone feel comfortable.

Hiring the friends of employees. While still beneficial to most firms, these working relationships have a couple of additional complexities. Most notable is the need to transition the friendship from one that is entirely social into a professional relationship, at least part of the time. Most people understand the need for a degree of professionalism in the workplace, but sometimes the reality of how it actually works requires a period of adjustment. Being aware and open about this potential issue is often all that is necessary, encouraging both the employee and the newly hired friend to discuss their feelings about any issues that come up.

Friendships between an employee and employer. These relationships become a bit trickier because the potential for—and the impact of—perceived or real favoritism is greater. Employers need to be sure that all their employees feel that they are treated equally and fairly. Owner/advisors should make friends with all their employees, take an interest in their personal lives and demonstrate that they like and care about each employee as a person outside of their jobs. I knew a retired colonel who told me that as part of their leadership training, all Army officers are taught that it’s very important to be sure that their subordinates like them. All business owners should receive the same training.

Hiring the friends of an owner/advisor. These relationships are the hardest to manage, but still far less troublesome than employees who don’t like their boss. The best cases are when the owner hires a former coworker or employee who had also become a personal friend. As you might imagine, the adjustment to a new working relationship usually goes smoothly. This isn’t always the case for personal friends who go to work for one another and can be extremely difficult for married couples (but that’s a can of worms for another column). It’s important for the employer to have this conversation before hiring a friend, to let him or her know exactly how their professional relationship will work. It’s essential to keep the lines of communication open to air any developing difficulties before they damage the working relationship, the friendship or both.

Of course, the favoritism issue will always be in the background. In friendships involving the firm owner, I often think of a high school football coach whose own kid is on the team. Usually, the coach will be harder on and less tolerant with his son to eliminate any perception of favoritism. This isn’t a bad model for all workplace friends.

Page 1 of 2
Single page view Reprints Discuss this story
This is where the comments go.