The Friendship Trade-Off

The question of how close you become to coworkers—particularly subordinates—is a very tricky one. There is no consensus among invincible executives on this point. A business enterprise that is run like a family has unique benefits—greater employee enthusiasm, a more synergistic spirit and sense of mission, and a lot of laughing and fun. These characteristics can inspire great productivity. Several invincible executives noted to me that family-style enterprises tend to have less employee turnover, which means greater efficiency. Hendrik Verfaillie, former CEO of Monsanto, believes that "the benefit of having friends and relationships in the company outweighs the negative situations, where you have to fire a friend, for example." Workers who develop close professional friendships with superiors and subordinates are more likely to be willing to stay late or come in on weekends when the company is in a crunch. They are also more willing to make pay and benefit sacrifices when times are bad.

But there is a downside. Doug Bain of Boeing, while maintaining upbeat and respectful relationships with his subordinates, agrees with those who say that you have to keep some professional distance from those who work for you. He notes that he has never had a party for coworkers at his home. If you get too close to your employees, it becomes very painful to have a "difficult conversation" with them about their professional situation. It is, for example, much harder to fire or demote a nonproductive employee if you have treated that person as a close friend or family member. Richard Bell, CEO of HDR, Inc, agrees: "Absolutely, I keep a distance. I am cordial. I talk with them. But I do not think that the boss has to sit right in the middle of them and be one of the gang." You have to keep some distance, albeit in a pleasant and professional manner, according to Bell. Besides, he notes, "they need their own time."

Close friends often become overly emotional during times of crisis—which is a major cause of the breakup of family businesses. In addition, disparities in compensation or promotions among "family-style" employees tend to get blown out of proportion. And close friendships between employees and customers or suppliers often lead to the employees compromising the best interests of their companies.

I have heard several struggling executives complain that their secretaries and assistants stopped taking them seriously after they made concerted efforts to treat their staff members like friends and equals. "They started to feel like they could get away with long lunches, doing a lot of personal things on company time—that kind of stuff," a senior manager of a management consulting firm lamented to me. "Then, when I tried to bring the issue up, they resented me for it," he added. "The whole situation became too emotionally charged—and I attribute that fact to my own insistence that everyone be part of a professional family rather than a professional organization." In fact, two mid-level managers told me that, after unsuccessful attempts at the "we're all friends" approach, they reverted to having their new staff assistants call them "Mr." rather than by their first names. "Keeping it formal simply took some of the unpredictability out of my job, so it was worth it," one of them confided to me.