As a new business owner many years ago, I made one of the common mistakes of small business owners: becoming too friendly with employees. As a twenty-something that wanted to be friends with everyone, swept up in the excitement of owning a business, I treated my employees like best friends, overstepping many of the marks that I would now consider good practice. This inevitably led to ‘break ups’ when they did what employees normally do, such as disagreeing with me, acting in their own interest, not turning up to work or resigning. My reactions were a combination of anger, disappointment, betrayal and (I have to admit) even tears once.

For small business owners, this is a delicate dance. The competing priorities going back and forth - of being open, welcoming, warm and of building a strong culture - against the need to maintain a level of authority and respect. These pressures constantly push against each other, and going too far one way or the other can have detrimental impacts. It’s very easy for the line between employee and friend to become blurred.

Being liked by your team is important to build culture, with openness, friendliness and generosity essential elements, but going too far can bite you later. Maintaining a level of authority is essential, as decisions and instructions that serve the best interests of the business, can often take priority over the interests of individual employees. Being too familiar can sometimes undermine this, with cunning employees knowing how to take advantage. A common instance I have seen are businesses that need to performance manage or fire an employee, but this situation becomes more difficult when the employee thinks they are best friends; in many cases the owner hasn’t made the hard decision.

Overly-familiar relationships can also undermine your standing and respect, if employees get to know parts of your life that should be kept private. In the worst case there can be deliberate attacks on the owner, as happened to me in my first business.  

The borderline between friend and employee can be many shades of grey for businesses owners, so let’s look at some practical approaches in order to keep check.

  • Approach work relationships cautiously. Get to know each other over a longer period of time, keeping extra social activities outside of work to a minimum until you know more about the type of person.
  • Be close but professional. Keep clear boundaries about what is work behaviour and what is social. One client of mine got drunk with his team and pashed one of the team mates’ friends, making for a very awkward Monday morning.
  • Extra social activities – keep to work related, or larger events such as a wedding. Avoid booze-fuelled events, as there are just to many opportunities to kill your culture and personal standing. Appreciate that your team has it’s own social life, which you should only be an occasional member.
  • Hire people that respect you and the business, understand that it’s your business and act accordingly.
  • Don’t rely on verbal agreements for employment, bonuses, wage increases or anything else important– get everything on paper.
  • Have policies and processes in your business, so you can deflect any difficult decisions away from being personal, by referring to company policy or the business plan. Position descriptions and KPI’s keep you focused on the needs of the business rather than leveraging (and sometimes blackmail) of your personal relationship.
  • Do your best to base rewards on structured programs, as ad hoc decisions set uncertain tone. One employer gave bonuses to the team one year with no link to performance or any measure of why that amount was given. The next year at the same time, there was no bonus, leaving staff wondering and creating unhappy staff for absolutely no reason. Expectation and entitlement can run away very quickly if you are overly generous without linking back to their role.

Balancing friendship with professionalism is not easy with employees, as a desire to want to be liked and to have a family-like team can easily be overdone. It’s a very delicate dance that never stops. It helps, however, if you first aim for respect, fairness and the long-term needs of the business. The more you get burnt from being too friendly, the more you pull back and approach with caution; many owners learn the hard way.

Being friendly – but not the best friend – is the safest approach.